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GE improved its financial position and strengthened businesses in 2019

General Electric Company is a high-tech industrial company that operates worldwide through its four industrial segments, Power, Renewable Energy, Aviation and Healthcare, and its financial services segment, Capital:

  • The Power segment offers technologies, solutions, and services related to energy production, including gas and steam turbines, generators, and power generation services.

  • The Renewable Energy segment provides wind turbine platforms, hardware and software, offshore wind turbines, solutions, products and services to the hydropower industry, blades for onshore and offshore wind turbines, and high voltage equipment.

  • The Aviation segment provides jet engines and turboprops for commercial and military airframes.

  • The Healthcare segment provides healthcare technologies in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery, biopharmaceutical manufacturing technologies and performance enhancement solutions. The Capital segment leases and finances aircraft, aircraft engines and helicopters.

The Company serves customers in over 170 countries. Manufacturing and service operations are carried out at 94 manufacturing plants located in 30 states in the United States and Puerto Rico, and at 190 manufacturing plants located in 37 other countries.

At year-end 2019, General Electric Company employed approximately 205,000 people, of whom approximately 70,000 were employed in the United States. Power, Renewable Energy, Aviation, Healthcare, and Capital segments employed approximately 38,000, 43,000, 52,000, 56,000 and 2,000 people, respectively.

According to its Annual Financial Report, consolidated revenues of the Company were $95.2 billion in 2019, down $1.8 billion or 2% for the year, primarily driven by the overall foreign currency impact on consolidated revenues, representing a decrease of $1.4 billion. Industrial segment revenues increased by $4.6 billion or 5.5% from $115.7 million in 2018 to $120.3 million in 2019, driven by the Aviation, Renewable Energy and Healthcare segments, partially offset by the Power segment.

For the year ended December 31, 2019, General Electric Industrial profit was $1.8 billion and profit margins were 2.1%, up $22.4 billion, driven by decreased non-cash goodwill impairment charges of $20.6 billion, decreased restructuring, and other costs totalling $1.5 billion. Industrial segment profit increased by $0.8 billion or 8%, due primarily to higher results within the Power, Healthcare and Aviation segments, partially offset by the performance of the Renewable Energy segment.

Cash flows from operating activities from continuing operations were $4.6 billion and $0.7 billion for the years 2019 and 2018, respectively. This increase was primarily due to Pension Plan contributions in 2019, compared to 2018. Industrial free cash flows were $2.3 billion and $4.3 billion for the years 2019 and 2018, respectively. This decrease was primarily due to higher cash used for working capital, compared to 2018.

At the end of 2019 backlog increased by $53.9 billion or by 15% from the previous year due to an increase in services backlog of $48.4 billion at Aviation and $1.9 billion at Renewable Energy, and an increase in equipment backlog of $1.9 billion at Renewable Energy.

At the end of 2018, backlog increased by $18.8 billion or by 6%, due primarily to an increase in services backlog of $16.7 billion, primarily at Aviation, and an increase in equipment backlog of $2.1 billion, also primarily at Aviation.

For the year ending December 31, 2019, consolidated revenues decreased by $1.8 billion or by 2%, driven primarily  by decreased Corporate revenues of $1.0 billion, largely attributable to the sale of the Current business in November 2018, and decreased Capital segment revenues of $0.8 billion. The overall foreign currency impact on consolidated revenues was a decrease of $1.4 billion.

In 2019 consolidated continuing losses decreased by $21.4 billion, due to decreased goodwill impairment charges of $20.6 billion and increased Industrial segment profit of $0.8 billion. The losses amounted to $0.04 billion, compared to $21.4 billion in 2018.

Industrial segment profit increased by $0.8 billion or by 8% with higher profit at Power, Aviation and Healthcare partially offset by lower profit at Renewable Energy.

The Grid and Hydro businesses are executing their turnaround plans and General Electric Company expects improvements in contribution margin in 2020.

Renewable Energy segment revenues represent 18% of total industrial segment revenues for the year ending December 31, 2019. Renewable Energy segment profit represents 6% of total industrial segment profit for the year ending December 31, 2019.

For the year 2019, Renewable Energy segment orders were up $1.6 billion or by 10%, segment revenues were up by $1.0 billion or by 7% and segment profit was down by $1.0 billion, representing losses of $0.7 billion in 2019, compared to the profit of $0.3 billion in 2018.

Backlog as of December 31, 2019 increased by $3.9 billion or by 16%, driven primarily by increases at Onshore Wind of $3.0 billion, due to increased demand.

In comparison to 2018, Renewable Energy segment orders were down $0.1 billion or by 1%, segment revenues were flat and segment profit was down $0.4 billion or by 60%, compared to 2017. Backlogs at the end of 2018 increased $1.2 billion (5%), driven primarily by the Onshore Wind business.

In 2019, the Company brought all of GE’s renewable and grid assets into the Renewable Energy business, creating a differentiated offering that can both produce renewable energy and integrate it into electrical grids. The Company achieved a record unit volume for onshore wind turbines in 2019.

Onshore Wind is the most established, profitable business, and it meets high customer demand and is growing internationally. Offshore Wind successfully installed the prototype for the Haliade™-X, which is already breaking records for power production by a wind turbine.

There are required turnarounds in Grid Solutions and Hydro. Improving project underwriting here will be a major focus for the Company in 2020.

General Electric Company expects to achieve its leverage targets in 2020. Closing the sale of BioPharma business and selling its remaining 37-percent stake in Baker Hughes over time will give the Company more cash to further reduce Industrial leverage. This will also help GE Capital reduce its external debt, including $16 billion that matures in 2020.