GE Faces Uncertain Future with More than $90 Billion in Active Projects in the Balance

Researched by Industrial Info Resources (Sugar Land, Texas)--As 2017 wound down, it became clear that General Electric (NYSE:GE) (Fairfield, Connecticut) was facing troubled times. Now, as the company formally reports its results for both fourth-quarter and full-year 2017, it is clear GE is facing a historic crisis--brought on by a misguided faith in demand for fossil-fuel technology and a separate financial hit that is being investigated by federal authorities. Industrial Info is tracking more than $90 billion in active projects involving GE and its subsidiaries.

Numbers don't lie: In the fourth quarter, orders in GE's Power business dropped 25% to $10.24 billion from the same period in 2016, which factored heavily in a stunning 88% drop in profits to $260 million. The Oil & Gas business also took a hit in the fourth quarter, despite a 73% increase in orders, with profits dropping 25% to $307 million. Power's full-year profits were down 45% to $2.79 billion, while Oil & Gas' full-year profits were down 35% to $899 million.

Despite overall gains in most of its other segments, including the Renewables business, GE reported a fourth-quarter net loss attributable to common shareowners of $9.83 billion, compared with net income of $3.49 billion in the same period of 2016. For the full year, net losses were $6.22 billion, compared with net income of $8.18 billion in 2016.

For years, GE's Power business invested in equipment and services for coal- and natural gas-fired power plants, including former Chief Executive Officer (CEO) Jeff Immelt's acquisition of Alstom S.A.'s power business, which services coal-fired plants. Industrial Info is tracking more than $71 billion in active projects involving the Alstom subsidiary, including more than $39 billion related to coal-fired power plants worldwide.

In the U.S., Alstom is a contractor on Grant County Public Utility District's $160 million generator rewind at the Priest Rapids Hydro Power Station in Mattawa, Washington, which covers 10 units and is expected to improve performance and extend the facility's service life. For more information, see Industrial Info's project report.

In Texas, GE's Power division is at work on two natural gas-fired, combined-cycle projects: Midlothian Energy LP's $258 million in turbine upgrades at a merchant power plant in Midlothian and $172 million in turbine upgrades at the Hays Energy Power Station in San Marcos. The project in Midlothian will upgrade six Alstom combustion turbines, while the San Marcos project will improve four Alstom single-shaft combustion turbines. Midlothian Energy is a subsidiary of Dynegy Incorporated (NYSE:DYN) (Houston, Texas). For more information, see Industrial Info's project reports on the Midlothian and San Marcos upgrades.

GE's Power business also is at work on a host of projects throughout Latin America, including state-run Eletricidade do Brasil's (Recife, Brazil) $1.02 billion Porto de Sergipe Power Station near Santo Amaro das Brotas, Brazil. The NGCC plant will feature three combustion generator sets, attached to a steam turbine. The plant is expected to supply 15% of the energy demand in northeastern Brazil when it is finished in mid-2020. For more information, see Industrial Info's project report.

Execs Insist Company is Staying Together
John Flannery, who inherited the CEO position from Immelt, acknowledged during the fourth-quarter earnings call that the Power business is going through "a difficult period" and conceded it will continue to face challenging market conditions.

But energy markets aren't the only rough terrain for GE: An insurance subsidiary, North American Life & Health (NALH), recently reported an after-tax charge of $6.2 billion for the fourth quarter. GE said its GE Capital business will make statutory reserve contributions of roughly $15 billion over seven years. During an earnings-related conference call, Jamie Miller, the chief financial officer of GE, acknowledged that the U.S. Securities and Exchange Commission is investigating practices that led to the massive loss.

Despite all the rough weather, GE executives insist the company is holding together. Alec Burger, the CEO of GE Capital Aviation Services, told the Air Finance conference in Dublin, Ireland, that GE is weighing "different structuring alternatives, not breaking up the company - and there is a difference," according to Reuters.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.