Summary
General Electric (GE) reported its second quarter 2018 results, highlighting a strategic shift focused on streamlining its portfolio and reducing debt. Consolidated revenues saw a modest increase of 3% to $30.1 billion, though organic industrial segment revenues declined by 6%, primarily due to weakness in the Power and Oil & Gas segments. The company is actively pursuing portfolio divestitures, including the recent sale of its Industrial Solutions business and announced plans to separate GE Healthcare into a standalone company. Restructuring and other charges were significant, reflecting ongoing cost-reduction efforts. GE's Industrial segment profit margins saw a slight improvement year-over-year on a GAAP basis, but the company is facing ongoing challenges in certain segments like Power and Renewable Energy due to market softness and pricing pressures. Liquidity remains a focus, with GE managing its cash position and debt levels. The company announced plans to substantially reduce GE Industrial net debt by approximately $25 billion by the end of 2020 and achieve at least $500 million in corporate savings by the same date. Despite ongoing challenges and a negative outlook from credit rating agencies, GE is navigating a significant transformation, with a clear strategy to reshape its business for future stability and growth. Investors will be closely watching the execution of these strategic initiatives, particularly the planned separations and debt reduction targets.
Financial Highlights
46 data points| Revenue | $29.16B |
| Cost of Revenue | $21.75B |
| Gross Profit | $7.41B |
| SG&A Expenses | $4.35B |
| Operating Expenses | $28.81B |
| Operating Income | $1.16B |
| Net Income | $800.00M |
| EPS (Basic) | $0.56 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 1.09B |
| Shares Outstanding (Diluted) | 1.09B |
Key Highlights
- 1Consolidated revenues increased 3% to $30.1 billion, while organic industrial segment revenues decreased 6% organically, driven by Power and Oil & Gas.
- 2Significant restructuring and other charges of $0.7 billion were incurred, impacting profitability.
- 3The company announced major strategic initiatives including the separation of GE Healthcare into a standalone company and an orderly separation from Baker Hughes (BHGE).
- 4Plans are in place to substantially reduce GE Industrial net debt by approximately $25 billion by the end of 2020.
- 5GE expects at least $500 million in corporate savings by the end of 2020 through a smaller headquarters.
- 6GE Capital's role is being reduced, with plans to make the segment smaller and more focused.
- 7Credit rating agencies (S&P, Fitch, Moody's) have revised their outlooks for GE and GE Capital to negative, indicating increased financial risk.