GE says main focus will be aviation, renewable energy
General Electric is moving further away from its heritage as a global conglomerate with a new plan to shed the company’s health care and oil services businesses.
GE announced Tuesday that it would spin off GE Healthcare into its own company and offload its stake in oil services giant Baker Hughes.
The company also said it’s planning “a smaller corporate headquarters,” though details on that element of the plan were not immediately available. GE made a splash in 2016 announcing plans to move its headquarters from Connecticut to Boston.
Taken together, the moves represent a continuation of the company’s effort to shrink.
The company has already sold off a huge portion of its GE Capital assets, announced plans to merge its train engine division with manufacturer Wabtec and sold other assets it was once known for, including appliances.
The slimmer GE will focus primarily on aviation, power and renewable energy businesses.
The transition reflects CEO John Flannery’s decision to guide the company away from its history as an owner of a wide-ranging assortment of businesses.
Flannery also has ordered the company to become more efficient, which has included significant job cuts.
“We are making fundamental changes to position our businesses for the future and redefine GE for another century of success,” Flannery said on a conference call. “This is a GE that is equipped to fight for the future.”
The Healthcare division, which made products in areas such as medical imaging and cell therapy, had sales of about $19 billion in 2017 and about 54,000 employees worldwide.
GE said it would announce the “structure, sequence and timing” of the health care spinoff in the future but said it would be complete within 12 to 18 months.
The decision to get out of the oilfield services business represents an aboutface from less than two years ago, when GE orchestrated the combination of its oil business with Baker Hughes in 2016.
GE plans to unload its 62.5 percent stake in the Baker Hughes business over the next two to three years.
After the GE Healthcare spinoff, the equivalent combined dividend paid to current GE shareholders will “likely” be reduced, Flannery said.
He said the company is aiming for significant debt cuts and more efficient operations, including at least $500 million in corporate cost cuts.