Chairman and CEO Jeffrey Immelt announced in an investor’s conference on Wednesday that the company plans to sell the GE Water business and the Industrial Solutions business as part of a push to focus on its core businesses. The Industrial Solutions business supplies equipment to the electrical distribution industry. The two units combined account for approximately $5 billion in annual revenue.
GE also promises to cut another $1 billion in expenses by shrinking its operations and possibly closing some facilities. Specifics were not discussed, but Immelt said there would be “a ton of footprint reduction” and some “organizational simplification” done.
Immelt stated, “We have made the company simpler. We have made the company deeper. We have invested in core businesses through Baker Hughes and with Alstom. We have really made, I think, smart investments to make the company a winner in the digital world and the supply chain value, both from backward integration and from additive, (which) really positions the company well. And then we have made the company simpler by executing on the GE Capital pivot really a year ahead of time and the dispositions of appliances, of water, and today, we are announcing the disposition of our Industrial Solutions business. So, (we’re) just simplifying the portfolio, making it more focused and making it deeper, and we think we are very well positioned in terms of how we look at the future.”
The company is still on track to hit a key investor target: earnings of $2 per share in 2018. According to Immelt, “We are basically going to go from $1.48 to $1.52 this year, $1.60 to $1.70 in 2017, and $2 in 2018.”
GE has grown its foreign businesses twice as much as its domestic business over the last 15 years, Immelt told investors, while selling 85% of its jet engines and gas-fired power turbines overseas.
“We’ve done all that with an antiquated tax plan, no Ex-Im Bank, and more or less on our own over the last 15 years,” Immelt said, referring to the U.S. Export-Import Bank. “If we got tax reform, if we got an Ex-Im Bank, those things are good for you and me.”
GE is seeking $100 million a year in new cost-cuts from “rationalizing” its facilities, he said. After a spate of acquisitions, including that of Alstom SA’s power business as well as Baker Hughes Inc., GE now has 150 million square feet of factory space world-wide.
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