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General Electric Hails Signs of Slow, Steady Growth

Jan. 29, 2020
Fourth quarter earnings report shows a “strong close to the year” for GE, according to CEO Larry Culp, Jr.

GE reported a total revenue of $95 billion in 2019, compared to 2018’s $97 billion. The results closely matched or slightly exceeded estimates.

That’s consistent with GE’s stated goals. CEO Larry Culp, Jr., in a statement, said GE is strengthening their business and “driving long-term profitable growth.” GE’s corporate plans include the selling or spinning off of less-profitable companies and property, including oil and gas holdings, to reduce the company’s net debt. “We are solidifying our financial position, continuing to strengthen our businesses as improvement efforts build momentum,” said Culp.

That long-term plan likely includes GE’s profitable aviation segment, which recorded an 8% jump in revenue between 2018 and 2019 from $30 billion to $32 billion and in increase in orders to $36 billion from $35 billion. The increase in orders was driven by end-market demand from the joint venture formed between GE Power and Baker Hughes shortly after the latter was deconsolidated from GE. Profit in the segment was up 19% compared to 2018’s fourth quarter, which GE attributed to improved volume and net productivity.

GE’s renewables segment marked a $1 billion revenue increase compared to last year’s revenue, as well as record deliveries per quarter of land-based wind turbines. The power segment, expected to slow because of GE’s deconsolidation strategy, posted $16 billion in 2019 compared to $22 billion in 2018.

Earnings from healthcare grew slightly, with revenue growth a very gentle slope: GE reported $21 billion in 2019 revenue there from $20 billion in 2018 with orders up 2% reported.

GE also announced its outlook for financial year 2020. In general, the conglomerate expects to double its free cash flow from $2 billion to $4 billion while it continues to increase its industrial profit margins. Their predictions take into account reduced profit from BioPharma due to its sale and reduced dividends from GE’s remaining stakes in Baker Hughes. The outlook also notes that it is dependent on the Boeing 737 MAX returning to service on-time in mid-2020. GE is planning on updating its 2020 outlook in an investor update in early March.

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