The long-awaited financial outlook for General Electric (GE) is well known and it confirms one thing: the industry giant is one of the most complex companies in the US.
This obviously makes the efforts of GE CEO Larry Culp to straighten out a business after years of aggressive acquisitions and mismanagement, which are infinitely more difficult. It also makes it more difficult for investors to control the company and decide if it should place chips on the Culp recovery specialist.
The activity is "complex and complex," said Jamie Miller, chief financial officer of GE, in an interview with Yahoo Finance.
GE is about to enter a wild three-year period, that's for sure.
The General Electric logo appears over a trading post on the floor of the New York Stock Exchange. (AP Photo / Richard Drew)
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What GE unveiled Thursday is a bit optimistic, but rich in detail that suggests that the company could achieve its new goals, provided that the world economy retreats and that Culp enjoys the support of its employees.
The company presented its plan in a 38-page presentation. Here are some elements that have caught the attention of Yahoo Finance:
Head office cost reductions of about $ 400 million to $ 500 million in 2019. Expect further downsizing as GE rethinks its business approach (and sells assets and cuts back). Miller declined to comment on how people would be let go to headquarters.
GE has used an optimistic brush to paint a picture of its outlook for 2020 by industry. Free cash flow improves in most businesses from one year to the next.
Industrial free cash flow is down $ 2 billion and stable in 2019, in "positive territory" in 2020 and "acceleration" in 2021.
GE is looking for other ways to reduce its debt, such as public takeover bids for outstanding debts.
Miller tells Yahoo Finance that she is "at ease" that most of the risks at GE Capital have been identified.
A slide from GE's 38-page financial forecast presentation. [Source: GE]
Culp continues to criticize his efforts to revive society. On Thursday morning, he said that 2019 will be a "reset year" and that GE's challenges are "complex". Miller said Culp envisioned GE with a "goal based on reality", unlike many other senior leaders in the company over the years. .
GE shares fell 1.7% in pre-market transactions, but reversed to increase by 3% in midday transactions. A ton to digest.
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GE has a lot to prove to investors. Despite the commendable attention to detail by Culp and his team, it may be better for investors to take a wait and see approach. This will allow these investors to understand the root causes of GE and reward Culp's progress.
Pass the coffee after analyzing GE's latest list of promises and numbers.
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