Summary
General Electric (GE) reported a significant shift in its financial strategy during the first quarter of 2015, marked by the announcement of its plan to "exit" most of its financial services business, GE Capital. This strategic pivot aims to refocus the company on its core industrial operations. The company incurred substantial charges in Q1 2015 related to this exit plan, impacting overall profitability. Despite a notable decline in revenues and earnings, particularly within the GE Capital segment, the industrial segments showed resilience, with Power & Water, Aviation, Healthcare, Transportation, and Appliances & Lighting all reporting increased segment profit or revenue, driven by factors like higher volume, improved productivity, and favorable business mix. Investors should note the substantial charges ($16.1 billion after-tax) recognized in Q1 2015 stemming from the GE Capital Exit Plan, which significantly weighed down net earnings. While the industrial businesses demonstrated positive trends in profitability and some revenue growth, the overarching story of this quarter is the aggressive deleveraging and restructuring of GE Capital. The company also provided a full guarantee for GE Capital's debt, a move designed to reassure bondholders during the transition.
Financial Highlights
44 data points| Revenue | $2.87B |
| Cost of Revenue | $13.52B |
| Gross Profit | $5.51B |
| SG&A Expenses | $4.42B |
| Operating Expenses | $24.62B |
| Operating Income | -$5.72B |
| Net Income | -$13.57B |
| EPS (Basic) | $-10.80 |
| EPS (Diluted) | $-10.80 |
| Shares Outstanding (Basic) | 1.26B |
| Shares Outstanding (Diluted) | 1.26B |
Key Highlights
- 1Announced a significant plan to reduce the size of GE Capital by selling most of its assets over the next 24 months, refocusing on industrial businesses.
- 2Incurred $16.1 billion in after-tax charges in Q1 2015 related to the GE Capital Exit Plan, significantly impacting reported net earnings.
- 3Consolidated revenues decreased by 12% to $29.4 billion, primarily due to GE Capital exit impacts and foreign exchange headwinds.
- 4Industrial segment revenues decreased by 1% to $24.4 billion, but industrial segment profit increased by 9% to $3.6 billion, driven by strong performance in Aviation and Appliances & Lighting.
- 5GE returned $2.4 billion to shareholders through dividends and stock buybacks in the first quarter.
- 6GE's credit rating outlook was stable, but Moody's downgraded its senior unsecured debt rating to A1 from Aa3 following the GE Capital Exit Plan announcement.