Woodward’s decision to wind down its on-highway natural gas truck business in China reflects a multi-year evaluation that failed to yield viable divestiture offers and saw the unit underperform consistently. The China OH segment represented less than 3% of consolidated revenues in fiscal 2025 and operated at a negative segment margin for the past two years. By closing the small manufacturing site and reallocating engineering and support resources, Woodward aims to eliminate a persistent drag on Industrial segment returns and sharpen its focus on markets with stronger growth trajectories.

The wind-down plan will conclude by the end of the current fiscal year, involving the closure of one manufacturing facility and the reduction of approximately 40 positions across sales, engineering and customer support. Management estimates one-time exit costs of $8 million to $10 million, primarily related to severance, facility decommissioning and contract terminations. These charges are expected to be recognized in Q3, with annual cost savings of roughly $5 million thereafter. The move follows record 2025 sales of $2.8 billion and adjusted EBITDA margin of 18.5% in the Industrial segment.

With China OH winding down, Woodward will redirect capital and technical expertise toward Transportation electrification, gas turbine controls for power generation and digital oil & gas solutions—areas that grew revenue by 12% in 2025 and delivered mid-20% segment margins. The company plans to invest $50 million in R&D for next-generation control platforms over the next two years, targeting compound annual revenue growth of 10% in those priority verticals. Leadership expects the streamlined portfolio to drive double-digit return on invested capital by fiscal 2027.