In a recent investor meeting,
General Electric Company
) reiterated its strategic goal to focus on its industrial
manufacturing roots and reduce dependence on the financial sector
as it aims to increase the corporate profit share from the
industrial units. Jeff Immelt, the Chief Executive of the
company, further believes that 2014 will be relatively better
than 2013 with record backlog of orders.
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During the investor presentation, General Electric envisioned
double-digit growth in profits from aviation, healthcare and
other industrial units in 2014, driven by higher investments in
the industrial sector. Operating profit margin from the
industrial businesses is expected to be 15.8% this year, up from
15.1% in 2012. At the same time, the company observed that it is
currently on track to reduce its profit share from the financial
units to 30% of the total by 2015.
Earlier, in its concerted effort to reduce credit risks, General
Electric had announced its plans to shrink its finance business
by 2015 through the divestiture of its North American consumer
lending unit. The strategic move was arguably the biggest step in
restructuring GE Capital's portfolio to shield the parent company
from intense market volatilities that plagued the market during
the 2008-09 financial crisis. The spin-off will also realign the
corporate strategy of the company to a manufacturing-based entity
with emphasis on big-ticket items such as medical equipment and
Moving forward, total revenue in 2014 is expected to remain flat
or increase by a modest 5% compared to the previous year.
Revenues from the Power & Water segment, which were plagued
by weaker demand for power turbines, are likely to improve in
2014 with stringent cost-cutting measures. However, revenues from
the Transportation segment are expected to fall due to a soft
North American coal market.
General Electric is one of the largest and the most diversified
technology and financial services corporations in the world. With
products and services ranging from aircraft engines, power
generation, water processing, and security technology to medical
imaging, business and consumer financing, media content, and
industrial products, the company serves over 100 million
customers worldwide. Its segments include Power & Water, Oil
& Gas, Energy Management, Aviation, Healthcare,
Transportation, Home & Business Solutions, and GE Capital.
General Electric currently has a Zacks Rank #3 (Hold). Other
companies in the industry that are worth mentioning include
Hutchison Whampoa Ltd.
Raven Industries Inc.
), each having a Zacks Rank #2 (Buy).