GE chief ex­ec­u­tive de­parts amid profit warn­ing

The Malta Business Weekly - - NEWS -

Gen­eral Elec­tric has ousted its chief ex­ec­u­tive, in­stalling new lead­er­ship for the sec­ond time in two years as it strug­gles to re­turn to growth.

Larry Culp, a GE board mem­ber who ran US man­u­fac­turer Dana­her for more than a decade, is to re­place GE vet­eran John Flan­nery, ef­fec­tive im­me­di­ately.

Shares surged al­most 10% on the news, although the firm also warned it would fall short of its profit fore­casts.

Mr Flan­nery had been in the role for less than two years.

He took over from vet­eran chief ex­ec­u­tive Jeff Im­melt, who had led the US in­dus­trial gi­ant since 2001.

Last year, Mr Flan­nery an­nounced a turn­around plan aimed at sim­pli­fy­ing the busi­ness model of the con­glom­er­ate, which had grown to en­com­pass ev­ery­thing from light bulbs to loans.

Since then, GE has an­nounced the sale of sev­eral di­vi­sions, in­clud­ing its rail and health tech­nol­ogy units.

How­ever, the dis­pos­als have failed to re­build in­vestor con­fi­dence and shares have al­most halved in the past 12 months.

In June, the Dow Jones In­dus­trial Aver­age cut the com­pany from its 30-com­pany stock in­dex – a move that re­flected its shrink­ing po­si­tion in the US econ­omy.

Mr Culp, 55, who will be chair­man as well as chief ex­ec­u­tive, said GE “re­mains a fun­da­men­tally strong com­pany with great busi­nesses and tremen­dous tal­ent”.

It re­mains com­mit­ted to its spinoff strat­egy, he added. That will leave it fo­cused on ar­eas such as jet en­gines, power plants and re­new­able en­ergy.

“We have a lot of work ahead of us to un­lock the value of GE. I am ex­cited to get to work,” Mr Culp said.

GE has been dogged by prob­lems at its power divi­sion, which makes ma­chin­ery for power plants and has strug­gled amid tepid de­mand.

On Mon­day, the firm said it ex­pected to write down $23bn in im­pair­ment charges on its power divi­sion.

The com­pany has also ap­pointed for­mer Amer­i­can Air­lines chief ex­ec­u­tive Thomas Hor­ton as lead di­rec­tor on its board.

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