Summary
General Electric Company (GE) reported its second-quarter 2016 results, showcasing significant progress in its strategic transformation. The company is actively divesting the majority of GE Capital's assets, a plan that is ahead of schedule and aimed at creating a simpler, more focused industrial company. This strategic shift is a key theme throughout the report, with substantial progress made in reducing the size of the financial services business. Despite ongoing restructuring charges and the impact of integrating the Alstom acquisition, GE's industrial segments demonstrated resilience, with notable revenue growth in Power, Renewable Energy, and Energy Connections. The company returned significant capital to shareholders through buybacks and dividends, underscoring its commitment to shareholder value while navigating a complex operational landscape. The financial performance for the quarter was bolstered by a substantial after-tax gain from the sale of the Appliances business. However, the financial services segment (GE Capital) continued to report losses, albeit with a significant year-over-year improvement due to the absence of prior year charges associated with the exit plan. Investors should note the substantial progress in reducing GE Capital's ending net investment and the successful rescission of GE Capital's designation as a Systemically Important Financial Institution (SIFI), which reduces regulatory oversight.
Financial Highlights
45 data points| Revenue | $33.49B |
| Cost of Revenue | $15.69B |
| Gross Profit | $6.19B |
| SG&A Expenses | $4.88B |
| Operating Expenses | $29.67B |
| Operating Income | $3.55B |
| Net Income | $2.91B |
| EPS (Basic) | $2.40 |
| EPS (Diluted) | $2.40 |
| Shares Outstanding (Basic) | 1.13B |
| Shares Outstanding (Diluted) | 1.15B |
Key Highlights
- 1GE is ahead of schedule on its GE Capital Exit Plan, having signed agreements for $181 billion of ending net investment (ENI) as of June 30, 2016.
- 2The company completed the sale of its Appliances business to Haier for $5.6 billion, recognizing an after-tax gain of $1.8 billion in the second quarter.
- 3Total consolidated revenues increased by 15% year-over-year to $33.5 billion, primarily driven by acquisitions, notably Alstom, and the sale of the Appliances business.
- 4Industrial segment revenues grew by 7% to $28.6 billion, with notable strength in Power, Renewable Energy, and Energy Connections, although Oil & Gas experienced a significant revenue decline.
- 5GE Capital's continuing operations reported a net loss of $600 million, a 22% increase in losses compared to the prior year's quarter, but a significant improvement from the prior year's six-month period.
- 6The company returned $18.0 billion to shareholders in the first half of 2016 through share buybacks ($13.7 billion) and dividends ($4.3 billion).
- 7GE Capital successfully obtained approval for the rescission of its designation as a Systemically Important Financial Institution (SIFI) from the Financial Stability Oversight Council (FSOC).