General Electric (NYSE:GE), which just announced major restructuring plans, will focus on margins and cost control in the renewables segment.
Chairman and CEO John Flannery, who has been leading the US conglomerate for 100 days now, wants to make GE “a more focused industrial company”, he said on Monday’s investor day presentation. GE will exit more than USD 20 billion (EUR 17bn) worth of assets in order to focus on three businesses: power, aviation and healthcare. Coupled with the announcement that the group will axe its quarterly dividend by 50% to USD 0.12 a share, the news brought GE’s stock price down 7%.
The renewables arm of GE seems to be safe for now. Flannery commented that there currently is a strong growth curve for this business. He believes that GE Renewable Energy, led by Jerome Pecresse, has very strong capabilities in onshore wind.
Flannery also mentioned that the company’s research centre is working on “a lot of interesting things on storage”. According to him, the combination of renewables and storage is “a mega trend in the industry”.
“The challenge in that business [Renewables], the thing that I’m focused on, is really the margin rate,“ Flannery stated, adding that margins, getting product cost down and making sure that LM Wind performs well are the major topics in the division. GE closed its EUR-1.5-billion acquisition of Danish wind turbine blades maker LM Wind Power in April 2017.
The presentation released by GE on Monday shows that one of the go-forward priorities for GE Renewable Energy is investing in product platforms, in digital and in blade technologies. The group describes LM Wind as “a key contributor to enhanced margin and cash flow story”. So far the integration of the Danish company is going smoothly, it says.
(USD 1.0 = EUR 0.850)
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