Struggling GE removes CEO, warns on 2018 earnings

NEW YORK: H Lawrence Culp assumed the helm of General Electric on Monday in a surprise move meant to stem a two-year decline that has humbled the oncemighty conglomerate and roiled investors.

The ouster of John Flannery gave GE its third chief executive in about 14 months.

GE also announced a massive asset-write down but its shares surged on Wall Street on Monday’s news. The engineering giant’s market value has been cut roughly in half in the last year.

In announcing Culp’s rise, the company, which was bumped from the prestigious Dow Jones Industrial Average in June, cited his history as chief executive of the industrial and healthcare conglomerate Danaher, where GE said he presided over a quintupling of market capitalisation. Culp was named to the GE board earlier this year.

GE’s other bombshell was that it planned to write down effectively up to US$ 23 billion in value from its troubled power business, the prime catalyst of its nosedive in stock market valuation. GE said it would fall short of key earnings targets for 2018.

“GE remains a fundamentally strong company with great businesses and tremendous talent,” Culp said in a statement.

“We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency.

“We remain committed to strengthening the balance sheet, including de-leveraging.”

Flannery was enlisted last summer amid deep disillusionment with former Chief Executive Jeffrey Immelt, who presided over major GE acquisitions in power and oil services that became albatrosses when those markets shifted. The power generation business has been particularly weak in recent years, due in part to the growth of renewable energy sources that has dented demand for GE’s turbines.

Flannery’s response included the sale of some assets and the elimination of more than 12,000 GE power jobs.

He also unveiled plans in June to shed its oil services and health care businesses to concentrate on power, aviation and wind turbines.

The decision to exit health care was controversial and could potentially be reversed under Culp. — AFP