GE Earnings Fall as New CEO Picks Up Restructuring Pace -- Update
October 20 2017 - 7:50AM
Dow Jones News
By Cara Lombardo and Thomas Gryta
General Electric Co. said its quarterly earnings fell as it
incurred hefty restructuring charges during Chief Executive John
Flannery's first official quarter at the helm, and the new CEO
pledged to exit more than $20 billion of the company's
businesses.
GE reported a third-quarter profit of $1.8 billion, or 21 cents
a share, down from $2 billion, or 22 cents a share a year earlier.
Excluding costly restructuring charges and other items, adjusted
per-share earnings fell to 29 cents from 32 cents. Impairments and
restructuring charges during the period dented GE's per-share
earnings by 16 cents.
The maker of jet engines, power turbines and locomotives said it
is looking to streamline its portfolio by more than $20 billion in
the next 1 to 2 years. The company also forecast adjusted earnings
for the full year that were significantly below the previous
target.
GE shares dropped 5% premarket Friday after closing Thursday at
$23.58. The company's stock has fallen 25% this year.
Since Mr. Flannery took over 2 1/2 months ago, he has begun
implementing his ideas to cut costs at the company and review a
far-reaching portfolio of business. The company said it cut $500
million in annual costs in the latest quarter, and $1.2 billion
year to date, as it seeks to cut more than $2 billion over two
years.
But Mr. Flannery has guarded the details, many of which likely
won't come until Nov. 13, when he is slated to release updated
financial targets and lay out his vision. It is likely to include
cutting thousands of jobs and scaling back GE's structure.
"We are focused on redefining our culture, running our
businesses better, and reducing our complexity," Mr. Flannery said
in prepared remarks Friday.
He has already called on company leaders to review their
divisions. He also wants to streamline the company's global
research efforts, which could include shutting down research
centers in Shanghai, Munich and Rio de Janeiro.
Mr. Flannery, a GE lifer who has made it clear he is open to
change, has also grounded a fleet of six corporate jets often used
by his predecessor.
GE's revenue jumped 14% to $33.5 billion in its third quarter,
up from $29.3 billion a year earlier. Analysts had expected revenue
of $32.56 billion, boosted by a merger of GE's oil-and-gas unit
with Baker Hughes.
Oil-and-gas revenue rose 81% from a year ago. Revenue growth was
mixed with aviation and health care businesses expanding, but
power, lighting and transportation all shrinking. Transportation
revenues dropped 14%.
Write to Cara Lombardo at cara.lombardo@wsj.com and Thomas Gryta
at thomas.gryta@wsj.com
(END) Dow Jones Newswires
October 20, 2017 07:35 ET (11:35 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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