01—Abstract
Summary
Summary of the 10-K filed February 12, 2021. Cited figures are marked; the original filing is the authoritative source.
General Electric Company (GE) reported its 2020 fiscal year results, marked by significant impacts from the COVID-19 pandemic, particularly on its Aviation segment.
Despite a substantial year-over-year revenue decline, GE demonstrated resilience through cost-saving measures and a notable reduction in borrowings, enhancing its liquidity position with $36.6 billiona in cash and cash equivalents. The company completed the divestiture of its BioPharma business for $21.1 billion, contributing to a significant pre-tax gain. However, it also recorded substantial non-cash impairment charges related to goodwill and assets across its Aviation, Power, and Capital segments, largely driven by the pandemic's impact and strategic business exits.
GE is actively managing its portfolio and de-leveraging its balance sheet, with consolidated borrowings reduced by $15.8 billionb. Looking ahead, GE continues to navigate economic uncertainties while focusing on operational execution and strategic priorities, including advancements in its Renewable Energy and Healthcare segments. The company's ability to manage costs and cash flow, alongside its deleveraging efforts, will be critical for investor confidence in the near to medium term.
02—Key points
Key Highlights
- Total revenues decreased by 16% to $79.6 billion, heavily impacted by COVID-19, especially in the Aviation segment.
- GE Industrial net debt decreased by $15.6 billion to $32.3 billion due to debt repayments and increased cash balance.
- Completed the sale of BioPharma business for $21.1 billion, recognizing a $12.4 billion pre-tax gain.
- Recognized significant non-cash impairment charges totaling $2.5 billion across various segments (Aviation, Capital, Power) due to the pandemic and strategic decisions.
- Aviation segment experienced a severe revenue decline of 33% and an 82% drop in profit due to reduced commercial air traffic.
- Healthcare segment saw increased demand for certain products like ventilators, partially offsetting declines in other areas.
- Ended the year with $36.6 billion in consolidated cash, cash equivalents, and restricted cash, with $20.2 billion in available credit lines, indicating a strong liquidity position.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, General Electric Co kept $0.08.
- Revenue$75.83B100.0%
- Cost of revenue−$60.42B79.7%
- Gross profit$15.41B20.3%
- Operating costs−$21.52B28.4%
- Operating income−$6.11B8.1%
- Interest, other & tax$11.81B15.6%
- Net income$5.70B7.5%
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 12, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $75.83B$90.22B | −15.9% |
| Cost of Revenue | $60.42B$66.91B | −9.7% |
| Gross Profit | $15.41B$23.31B | −33.9% |
| R&D Expenses | $2.56B$3.12B | −17.7% |
| SG&A Expenses | $12.63B$13.81B | −8.5% |
| Operating Expenses | $81.26B$92.75B | −12.4% |
| Operating Income | -$6.11B-$613.00M | −896.7% |
| Net Income | $5.70B-$4.98B | +214.6% |
| EPS (Basic) | $4.63$-4.99 | +192.8% |
| EPS (Diluted) | $4.63$-4.99 | +192.8% |
| Shares Outstanding (Basic) | 1.09B1.09B | +0.3% |
| Shares Outstanding (Diluted) | 1.09B1.09B | +0.4% |
05—Questions
Frequently Asked Questions
How did COVID-19 impact GE's financial performance in 2020?
The COVID-19 pandemic had a material adverse impact on GE's operations and financial performance, particularly in its Aviation segment due to reduced global air travel. This led to decreased demand for commercial engines and services, lower shop visits, and a significant drop in revenue and profit for the segment. While Healthcare saw increased demand for certain products like ventilators, overall business performance was affected by varying degrees across segments due to operational and supply chain disruptions, and reduced customer spending.
What significant debt reduction actions did GE undertake in 2020?
GE significantly reduced its consolidated borrowings by $15.8 billion in 2020. This was achieved through debt tenders at GE Industrial ($4.2 billion) and GE Capital ($11.9 billion), repayment of GE Industrial commercial paper ($3.0 billion), and debt maturities at GE Capital ($10.5 billion), partially offset by new debt issuances. GE Industrial's net debt decreased by $15.5 billion.
What was the impact of asset impairments and business dispositions on GE's results?
GE recognized substantial non-cash pre-tax impairment charges totaling $2.5 billion in 2020. These included goodwill impairments in Aviation ($0.9 billion) and Capital ($0.8 billion), as well as impairments of property, plant, and equipment and intangible assets in Power ($0.4 billion) and impairments on the GECAS leasing portfolio ($0.5 billion). These were driven by the pandemic's impact and strategic shifts, such as exiting the new build coal power market. The company also completed the sale of its BioPharma business for $21.1 billion, which resulted in a significant pre-tax gain of $12.4 billion.
How is GE's liquidity position at the end of 2020?
GE ended 2020 with a strong liquidity position, holding $36.6 billion in consolidated cash, cash equivalents, and restricted cash. In addition to this cash balance, the company had access to $20.2 billion in available credit lines. GE Industrial's cash, cash equivalents, and restricted cash totaled $23.2 billion, while GE Capital held $13.4 billion.
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