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General Electric expects to dispose of its Transportation business unit over the next two years, along with its Industrial Solutions and Lighting activities, new CEO John Flannery confirmed on November 13.
Presenting his reshaping programme to investors, Flannery indicated that he was looking to ‘focus the portfolio’ around the power, aviation and healthcare markets, plus additive manufacturing, as he battles to turn around a business that has seen its stock market value fall by 35% this year, or more than US$100bn. Other changes include reducing the company board from 18 to 12 members and reducing dividend payments to around $1 from a target of $2 per share, the first reduction since 2009.
GE had indicated in October that it was exploring options to dispose of business activities valued at around US$20bn over the next two years, with GE Transportation thought to be on the list. The company had already sold off most of its consumer and finance operations. In his presentation, Flannery indicated that more than 10 business units were expected to go.
Insisting that GE Transportation was a ‘global market leader’ with a premier offering and strong digital business that was ‘close to key customers’, the group said the recent downturn in the North American locomotive market had been partly offset by international growth and a strong backlog in the services business. ‘Adapting to realities’ had included base cost reductions through ‘rigorous supply chain management’ and a focus on capital investment to optimise working capital requirements.
Nevertheless, there were ‘continued market challenges’ in Q4 and the business would still be under pressure in 2018-19. Predicting a ‘soft’ market for 2018, GE expects Transportation revenues to be down by 15% and profits by 25%.
This article first appeared on www.railwaygazette.com
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