GE CEO: This is the end of the blue chip’s overhaul — ‘We are finished’

General Electric Chairman and CEO John Flannery told CNBC on Tuesday that he’s very comfortable now with what’s going on inside the company.

“I’m a believer,” Flannery said in an interview with “Squawk on the Street.” “I’m very comfortable. When we have seen issues along the way, we’ve serviced them, we’ve dealt with them and I think today is another example of that.”

Asked whether GE will be making any other restructuring moves, Flannery said, “We are finished.”

GE shares, which have lost about half their value over the past 12 months, surged Tuesday after the industrial giant announced plans to spin off its health-care unit and divest its stake in oil services company Baker Hughes over the next two to three years.

Flannery expects GE Healthcare will thrive outside the company, saying it was also doing well inside. “I’m looking forward to getting my health-care shares,” he added.

The health-care unit accounted for about 16 percent of GE’s overall sales last year.

“There’s a lot of change in that industry,” Flannery said about health care. “Artificial intelligence, machine learning … cell therapy, immunotherapy. There’s just a constant stream of investment ideas we could pursue better in that fashion.”

The GE boss is focusing his turnaround efforts on the company’s aviation, power and renewable energy businesses.

“We are transferring certain things back to the business, eliminating things, certain things,” said Flannery, adding these changes will “empower” GE going forward.

Flannery also told CNBC that the company wants to materially reduce the balance sheet of GE Capital.

Earlier this year, the company said it took a $6.2 billion after-tax charge for the fourth quarter of 2017 and expects to contribute $15 billion over the next seven years to shore up GE Capital’s insurance portfolio reserves.

Tuesday’s shake-up at GE came the same day the company was removed from the Dow Jones Industrial Average after more than a century as a component. GE was replaced by Walgreens Boots Alliance.

Flannery had been working on an aggressive overhaul. He succeeded Jeff Immelt as GE chairman and chief executive in the latter half of 2017. Immelt’s departure capped a rocky 16-year run that saw GE’s stock lose about 38 percent of its value.

During the wide-ranging interview, Flannery also said:

He’s been focusing on how to overhaul the structure since Day 1.
GE’s underfunded pension liability will be cut dramactically.
The health care and Baker Hughes moves will significantly cut debt.
GE will have the firepower to tackle the issues surrounding insurance.
— CNBC’s Tae Kim contributed to this report.

This entry was posted in CEO Interviews, CEOS, Company News. Bookmark the permalink.

Leave a Reply