From turbines and oilfield equipment, to aircraft engines and power plants, General Electric is plugged in to industrial equipment businesses that shape the modern world. The company produces aircraft engines, locomotives and other transportation equipment, generators and turbines, lighting, and oil and gas exploration and production equipment. GE also has a healthcare products business, which it plans to separate into a standalone company, and a financial services division, the size of which it is reducing (especially its energy and industrial finance business). More than a third of GE’s sales comes from its US operations.
Aviation is General Electric's largest segment, accounting for about a quarter of its total revenue. Through that division, GE develops military and commercial aircraft, aircraft engines, and associated mechanical and electrical aircraft components. Aviation also provides maintenance, repair, and overhaul services.
The Power segment (more than 20% of total revenue) generates energy for industrial, governmental, and other clients via oil, gas, coal, diesel, nuclear, and water technology. The business also offers power system maintenance and upgrade services and power grid products. GE is reorganizing Power into two segments: Power and Gas Power. Power includes the company’s steam power and power conversion operations and its nuclear joint ventures with Hitachi and Toshiba. Gas Power comprises gas life cycle activities and power services.
Through its Oil & Gas business GE sells equipment and services for oilfields, turbomachinery, refining, and distribution as well as technology for measurement, testing, and inspection. It contributes about 20% to sales.
Healthcare (about 15% of revenue) products include technology andd services for medical imaging, diagnosis and patient monitoring, drug discovery, and biopharmaceutical manufacturing. GE is selling Healthcare’s BioPharma segment to Danaher for $21.4 billion; the company is also separating the remaining Healthcare division into a standalone business.
Capital offers financial products and services to clients in markets associated with GE’s industrial sectors. GE Capital Aviation Services (GECAS) provides aircraft, components, and materials in addition to financing options including operating leases, sale-leasebacks, secured debt financing, asset trading and servicing, and airframe parts management. GE is narrowing Capital’s focus by reducing the segment’s energy and industrial financing activities.
Revenue from the company’s Renewable Energy segment accounts for about the same proportion of total revenue as does GE Capital. Renewable Energy constructs and services onshore and offshore wind turbines and blades and hydropower technology. GE is reorganizing Renewable Energy to incorporate its grid solutions, solar, and storage assets (which are currently housed under Power).
In 2019 GE spun off and merged its Transportation segment (less than 5% of sales) with US rail equipment producer Wabtec in exchange for $2.9 billion in cash and a 24.3% stake in the company. The division supplies locomotives, mining equipment, marine diesel and stationary power diesel engines for land and offshore drilling. It also provides maintenance, repair, and upgrade services and efficiency software.
Based in Boston, Massachusetts, General Electric has about 160 manufacturing plants in some 35 states in the US and Puerto Rico; it also operates approximately 300 plants in about 40 other countries. Its vast operations are located in Africa, the Americas, Asia, Australia, Europe, and the Middle East. The company serves customers in more than 180 countries and generates greater than 60% of its revenue from international markets.
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General Electric's customers include industrial, aviation, transportation, mining, and energy companies; hospitals, medical and research facilities, and pharmaceutical and biotechnology companies; and governments.
Since 2014 General Electric has frequently shuffled the divisions of its operating segments, divested underperforming assets, and acquired new businesses. The company’s revenue has stagnated as a result, barely moving each year for overall growth of 4%. Net income over that period has cratered from a gain of $15.2 billion in 2014 to a loss of $22.8 billion. Large reductions in 2015 (when it began shrinking its Capital segment), 2017 (driven by decreased industrial earnings, increased financial services losses, higher income taxes on its industrial businesses, and increased interest and other financial charges), and 2018 (after it received a goodwill impairment following its acquisition of oilfield services company Baker Hughes) drove the fall. The company is burning through cash; it depleted its stores each year for a total reduction of about 60%. However, it managed to pay off half of its long-term debt.
GE’s revenue increased 3% to $121.6 billion in 2018 on growth in its Oil & Gas, Aviation, Healthcare, and Renewable Energy segments; increased growth and lower impairments for its capital businesses; and a positive foreign currency impact.
The company’s net loss grew by 156% in 2018 compared to the previous year. Goodwill decreased mostly because of the Baker Hughes impairment, GE’s sale of its distributed power business, and US dollar currency effects.
GE ended 2018 with cash of $35.5 billion, down 21% from the prior year. Operations provided $3.4 billion, and investments added $2.3 billion (principally because of divestments). Financing activities used $2.3 billion, mainly for dividends paid.
General Electric is making sweeping changes to its business intended to correct years of cash burn – a trend top brass doesn’t expect to reverse soon. The company is divesting its interest in less promising segments while streamlining other divisions.
In February 2019 GE sold its Transportation segment to US rail equipment company Wabtec for $2.9 billion and about a quarter equity stake in Wabtec. The segment’s revenue had decreased from $5.9 billion in 2015 to $3.9 billion in 2018. Shortly thereafter the company sold off its Current business unit to American Industrial Partners. Current's portfolio includes LED and traditional lighting products as well as control sensors and software.
GE also said that month that it would sell the BioPharma business housed under its Healthcare segment to medical tools and technology company Danaher for $21.4 billion. GE plans to use the deal’s proceeds to pay down its debts.
The company’s Oil & Gas segment operates through majority-owned subsidiary Baker Hughes. Through a public offering and a share repurchase in November 2018 GE reduced its stake in BHGE from 62.5% to 50.4%. The reduction accords with GE’s plan – announced in June 2018 – to separate from BHGE over time, as US rig count and drilling activity decline and oil and gas capital expenditures are forecasted to decrease.
In November 2018 GE revealed plans to restructure its Power segment into Gas Power and Power portfolios. The plan would lower costs by eliminating its Power headquarters.
As part of a strategy initiated in 2015, GE shrunk its Capital segment in 2018 by reducing its energy financial services and industrial finance functions. That year the company sold off its energy financial services debt origination business, certain energy financial services investments, and its healthcare equipment finance receivables.
Mergers and Acquisitions
In its largest acquisition to date, General Electric in 2017 purchased Baker Hughes for $25 billion and merged it into its existing oil and gas assets. The combined entity is called Baker Hughes, a GE Company and is publicly traded. GE owns about 63% of the entity and legacy Baker Hughes shareholders own the remaining amount.
In a significant move to bolster its growing GE Digital operations, GE in early 2017 purchased ServiceMax, a provider of cloud-based field service management (FSM) technology, for $915 million. The acquisition gave GE Digital new capabilities in the $1 trillion market for industrial service, enabling customers to glean more value from their assets and find greater efficiency in their field service processes.
Also in 2017, GE obtained LM Wind Power, a Denmark-based technology developer and manufacturer of rotor blades for the wind industry, for almost $1.7 billion. The major transaction deepened GE's capabilities and scope within the burgeoning renewable energy sector. The company plans for LM Wind's technology and blade engineering capabilities to improve its own overall wind turbine performance, lowering the cost of electricity and increasing the value for its customers.
In late 2015, GE acquired the power assets of France's Alstom for about $10 billion. The significant deal expanded GE's global base of power-generating turbines. It also provided the company with access to expected growth in emerging markets as most of the global markets switch to cleaner power plants.
General Electric was established in 1892 through the merger o Thomson-Houston and Edison General Electric. Charles Coffin was GE's first president, and Thomas Edison, who left the company in 1894, was one of the directors.
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