Siemens Energy appears to be back on track after pushing through a restructuring of its troubled wind power subsidiary, Gamesa.
The German energy technology company reported positive quarterly earnings on Wednesday, and dramatically raised its profit forecast for the remainder of the current year.
The company, which split off from German engineering giant Siemens in 2020, has struggled with losses in the wind power subsidiary and has been forced to issue numerous profit warnings in its relatively short history.
But Wednesday's report indicated that Siemens Energy made a bottom-line profit of €108 million ($116 million) between January and March. That result is a major improvement over the loss of €189 million the company reported in the same quarter of last year.
Turnover rose by 3% to €8.3 billion, the company said.
A restructuring plan for Gamesa is in place, according to the company, and expected to help stem losses there and bring the division back into the black by 2026.
The improved quarterly results reflect "the continued strong demand for our energy transition technology as well as initial successes in stabilizing the wind business," said Siemens Energy chief executive Christian Bruch. "Against the backdrop of this positive development, we have raised our outlook."
The company had previously forecast growth in turnover during 2024 of 3% to 7%, but raised those expectations to 10% to 12%. That change adds billions in expected revenue.
Margins are also expected to be somewhat more favourable.
Siemens Energy, however, left its annual bottom line profit target unchanged at €1 billion.
That indicates that the company expects to record losses in the second half of the its financial year, since profits over the past six months already stand at nearly €1.7 billion.
Siemens Energy is still working off unprofitable contracts in the troubled Gamesa wind energy business, and also struggling to address chronic quality issues.
Gamesa also contributed significant losses in the second quarter, although these were offset by solid figures in other areas, particularly Grid Technologies.
The long-term growth strategy for Gamesa focuses primarily on Europe and the United States and adjusting production in the particularly troubled onshore wind business.
The restructuring at Gamesa is also expected to include job cuts, although Siemens Energy has not commented on the extent of potential job losses.
However, given the growth in the offshore sector, the number of employees at Gamesa will remain "roughly constant" over the next few years, the company said.
However, the author of the restructuring plan will no longer implement it. Current Gamesa boss Jochen Eickholt, who has been fighting to turn around the ailing business for the past two years, will resign from his position on July 31.
The 62-year-old Eickholt will be succeeded by Vinod Philip, 50.
Bruch said it was time for a generational change at the company, now that the multi-year restructuring plan has been implemented, and thanked Eickholt "for his commitment in turbulent times."