01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
General Electric (GE) in 2017 faced significant headwinds, reporting a substantial net loss of $(6.2) billion, or $(0.72) per share, a stark contrast to the prior year's profit.
This downturn was primarily driven by considerable charges and impairments, including a $6.2 billiona after-tax charge related to GE Capital's insurance business, alongside restructuring costs and impairments within its industrial segments. Consolidated revenues saw a slight decrease to $122.1 billion. Despite these challenges, GE continued its strategic portfolio reshaping, completing the combination of its Oil & Gas business with Baker Hughes and selling its Water business.
The company also announced plans to exit over $20 billionb of assets in 2018-2019. Management acknowledged that 2017 results were below expectations, attributing the decline to softer market demands in Power, restructuring costs, and significant corporate charges, particularly related to the insurance business review. The company is focused on cost reduction, operational improvements, and strengthening its cash position for 2018.
02—Key points
Key Highlights
- GE reported a net loss of $(6.2) billion for 2017, a significant reversal from a net profit of $8.2 billion in 2016, largely due to substantial charges.
- The company incurred a significant after-tax charge of $6.2 billion in Q4 2017 related to its run-off insurance business, including an increase in reserves.
- Consolidated revenues decreased slightly to $122.1 billion in 2017 from $123.7 billion in 2016.
- GE completed the combination of its Oil & Gas business with Baker Hughes to form Baker Hughes, a GE company (BHGE) in July 2017.
- The company sold its Water business for $3.1 billion, recognizing a pre-tax gain of $1.9 billion.
- Significant restructuring and impairment charges were recorded, totaling $5.3 billion for 2017, impacting segments like Power and Capital.
- GE announced plans to exit over $20 billion of assets in 2018-2019 as part of its ongoing portfolio review.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, General Electric Co lost $0.09.
- Revenue$99.28B100.0%
- Cost of revenue−$64.33B64.8%
- Gross profit$34.95B35.2%
- Operating costs−$43.20B43.5%
- Operating income−$8.25B8.3%
- Interest, other & tax−$231.0M0.2%
- Net income−$8.48B8.5%
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $99.28B$119.47B | −16.9% |
| Cost of Revenue | $64.33B$62.44B | +3.0% |
| Gross Profit | $34.95B$57.03B | −38.7% |
| R&D Expenses | $5.50B$5.44B | +1.3% |
| SG&A Expenses | $14.26B$17.76B | −19.7% |
| Operating Expenses | $112.71B$116.58B | −3.3% |
| Operating Income | -$8.25B$7.80B | −205.8% |
| Net Income | -$8.48B$7.50B | −213.1% |
| EPS (Basic) | $-8.24$6.08 | −235.5% |
| EPS (Diluted) | $-8.24$6.00 | −237.3% |
| Shares Outstanding (Basic) | 1.09B1.13B | −3.7% |
| Shares Outstanding (Diluted) | 1.09B1.14B | −4.9% |
05—Questions
Frequently Asked Questions
What was GE's overall financial performance in 2017?
General Electric (GE) reported a significant net loss of $(6.2) billion for the year ended December 31, 2017, compared to a net profit of $8.2 billion in 2016. This was primarily driven by substantial charges related to its run-off insurance business, restructuring costs, and impairments across various segments.
What were the major strategic actions taken by GE in 2017?
In 2017, GE completed the combination of its Oil & Gas business with Baker Hughes, forming Baker Hughes, a GE company (BHGE). The company also sold its Water business for $3.1 billion and announced plans to exit approximately $20 billion of assets in 2018-2019 as part of a broader portfolio review.
What significant charges impacted GE's 2017 results?
GE recorded a substantial after-tax charge of $6.2 billion in the fourth quarter of 2017 related to its run-off insurance operations, primarily due to an increase in future policy benefit reserves. Additionally, the company incurred significant restructuring and impairment charges totaling $5.3 billion.
How did GE's different segments perform in 2017?
GE's industrial segments faced mixed performance. Power revenues declined 2% with a 45% drop in segment profit due to softer market demands and inventory charges. Aviation and Healthcare showed revenue growth and improved segment profit, driven by strong demand and new products. The Oil & Gas segment's revenue increased significantly due to the Baker Hughes transaction, but core organic revenues declined. GE Capital reported substantial losses, heavily impacted by insurance-related charges and strategic actions.
06—Continue