General Electric CEO John Flannery has announced on 13 November that, within two years, the company will sell its Transport, Industrial Solutions, Current & Lighting business and more than 10 other transactions, as the company will focus to develop and invest in its other divisions. “To support these investments, GE will exit USD 20 billion of non-core or smaller businesses, including the pending sale of Industrial Solutions and proposed sale of Lighting business,” Flannery said.
GE is in the early stages of selling process and is exploring strategic options for the sale of its Transport unit and a “multitude of possibilities that may include, among several options, creative approaches used to transition GE’s Consumer Finance business into Synchrony Financial or models like the Baker Hughes and GE Oil & Gas merger. This move is in line with company’s broader efforts to divest USD 20 billion in assets over the next few years. The Transportation business remains committed to building on its strong culture of innovation, deep domain, world-class technology and digital solutions in a way that best positions the business for growth.”
GE Transportation business includes Digital Solutions, Locomotives & Services, Mining & Digital Mining and Marine Drill Solutions. Last year, the revenue of the transport unit was USD 4.7 billion, and the segment’s profit was reported at USD 1 billion. Transport unit’s major products are locomotives, rail services, digital solutions, mining equipment, diesel engines. According to the company’s 2016 annual report, rail carload volumes, especially in North America, continue to decline and the number of parked locomotives remained high throughout 2016. Global locomotive deliveries were down from 985 units in 2015 to 749 units in 2016, due to a lower need for power across the railway industry. The Signaling business was sold to Alstom on November 2, 2015 for approximately USD 800 million.
According to the CEO, in the future, the company will be highly focused on industrial sector with unmatched global scale and strength in technology, services, additive manufacturing, and the digitization of industry. Currently, 85% of GE’s industrial profit comes from businesses power, aviation and health sectors. “The company will invest in areas that play to its unique strengths, including differentiating Predix, GE’s software platform for the industrial internet, in the digital space, and will focus on cash generation and returns,” Flannery explained.
To strengthen the company for the long term, GE needs to improve its cash position. It is managing for total shareholder return by balancing an aggressive focus on costs with critical investments in long-term growth initiatives like investing in R&D.
During the third-quarter of 2017, GE made progress in streamlining and simplifying its portfolio, closing transactions to sell the GE Water & Process Technology business for USD 3.4 billion and signing a deal to sell its Industrial Solutions unit for USD 2.6 billion. Earlier in July, GE also announced the completion of the combination of GE’s oil and gas business with Baker Hughes, creating the world’s first fullstream oil and gas company.
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