Published on March 9, 2014
What is General Electric?
In 2008, an icon of American business was on the brink of disaster. Lured by enormous profits, General Electric had strayed from its manufacturing roots and amassed over half of a trillion dollars in risky banking assets. The ensuing crisis, however, served as potent catalyst for an overhaul. After a half-decade of transformation, here’s a look at where GE stands today…
First, an overview of GE’s 2013 revenue… GE’s revenue totaled $146 billion in 2013. Here’s a breakout by each business in its portfolio. Transportation 4% Energy Management 5% Oil & Gas 11% Power & Water 17% Healthcare 12% Aviation 15% Appliances & Lighting 6% GE Capital 30%
And profits… Transportation 5% Energy Management 0% Oil & Gas 9% Power & Water 20% Healthcare 12%Aviation 18% Appliances & Lighting 2% GE Capital 34% GE generated $13B in profits across the portfolio in 2013.
And now for a deep dive into GE’s 8 different businesses, in order of the fastest-growing segments. An overview of 3 key trends investors must watch in 2014 follows…
1. GE Capital GE Capital helps customers finance home projects, including furnishings, appliances, and home improvements. GE is shifting its focus from banking towards industrial businesses. 30% % of GE Revenue 34% % of GE Profits Includes lending to middle-market customers, i.e. businesses generating $10M to $1B in revenue. 2013 Stats Revenue: $44B 3-Yr Revenue Growth Rate: -4.0% Profit Margin: 18.7%
2. Power & Water Includes power generation, nuclear, and renewable products. 2013 Stats Revenue: $25B 3-Yr Revenue Growth Rate: 0.4% Profit Margin: 20.2% GE’s 9E gas turbine. Gas and steam turbines generate power for household and industry use. Currently, GE has 13,000 installed around the world. 17% % of GE Revenue 20% % of GE Profits
3. Home & Business Solutions GE’s Café Series refrigerators come equipped with high-tech climate monitoring. GE has plans to use the industrial Internet to monitor appliance performance and pre-empt failures. 6% % of GE Revenue 2% % of GE Profits Includes home and business products including refrigerators, dishwashers, and light bulbs. 2013 Stats Revenue: $8B 3-Yr Revenue Growth Rate: 1.6% Profit Margin: 4.6%
4. Healthcare GE’s Optima PET/CT 560 scanner conducts a full head-to-toe scan in one pass to reduce patient time. 12% % of GE Revenue 12% % of GE Profits Includes products ranging from medical imaging and diagnostics to patient monitoring systems. 2013 Stats Revenue: $18B 3-Yr Revenue Growth Rate: 2.6% Profit Margin: 16.7%
5. Aviation GE’s GEnx engine, the world’s first commercial jet engine with front and rear fans made of carbon fiber composites to reduce weight. 15% % of GE Revenue 18% % of GE Profits Includes jet and turboprop engines, components, and systems for commercial, military, and business aircraft. 2013 Stats Revenue: $22B 3-Yr Revenue Growth Rate: 7.5% Profit Margin: 19.8%
6. Energy Management GE Power Conversion products equip a ship carrying liquefied natural gas with an integrated power and propulsion package. 5% % of GE Revenue 0% % of GE Profits Includes products related to the distribution and transmission of power and energy. 2013 Stats Revenue: $7B 3-Yr Revenue Growth Rate: 14.0% Profit Margin: 1.5%
7. Transportation GE’s Evolution Series locomotive, powered by a 12-cylinder diesel engine. The 16-cylinder version is capable of delivering 6,000 horsepower. 4% % of GE Revenue 5% % of GE Profits Includes home and business products including refrigerators, dishwashers, and light bulbs. 2013 Stats Revenue: $6B 3-Yr Revenue Growth Rate: 21.6% Profit Margin: 19.8%
8. Oil & Gas An illustration of a GE MicroLNG plant, currently in development. The plant will allow GE to liquefy natural gas in remote locations, which will reduce need for fuel transport for vehicles. 11% % of GE Revenue 9% % of GE Profits Includes oil and gas equipment and services. 2013 Stats Revenue: $17B 3-Yr Revenue Growth Rate: 22.5% Profit Margin: 12.8%
So, what is General Electric? GE, in short, is a manufacturer and a lender. It makes machines that power the world, engines for transport, health devices, and loans that stimulate investment. And after 122 years of innovation, GE still manufacturers the product that started it all – the incandescent light bulb. Now, for the products of the future…
3 Trends You Must Watch at GE 1. The advent of the industrial Internet GE estimates it could add between $10 trillion and $15 trillion to global GDP in 20 years. 2. The unleashed opportunity in 3-D printing Manufacturers are best poised to incorporate 3-D printing into production in areas like aerospace, a potential $1 billion market. 3. The shale gas revolution GE is poised to convert trucks and other locomotives to natural gas to generate huge savings in fuel efficiency.
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