General Electric eyes $4 billion asset sales, clarifies on issues surrounding capital allocation

Here’s what the CFO of General Electric had to say on how the conglomerate will raise funds, issues surrounding its stake in Baker Hughes, capital allocation at GE, and the turn around of GE Power.

While speaking at an event organized by Citigroup in Miami, Jamie Miller, General Electric’s chief financial officer, disclosed that the conglomerate has “line of sight” on its first $4 billion asset sales under its plans $20 billion asset disposals plan.

Miller also dismissed rumors of GE selling its shares to raise more capital.

GE has let it be known that it plans on selling its transportation unit, which produces railway locomotives, its lighting division, which makes bulbs for consumers, and its connection business, which sells generators, motors, automation and electrical grid equipment.

Miller also stated, GE does not plan on quickly selling its 62.5% stake in Baker Hughes before the completion of the two-year lockup period, thus reversing an earlier stance that cast uncertainties around Baker Hughes.

While speaking at another investor conference in Miami, organized by Barclays, Miller said GE has no plans to raise equity to strengthen its balance sheet.

GE has a “fairly deep dive into the different elements of the company. And we have no plans for an equity raise. It’s not been discussed,” said Miller.

Last month, John Flannery, GE’s CEO, had flamed speculation on possible divestitures at the 126-year-old conglomerate when he said GE was weighing “all options.”

Miller provided context to Flannery’s statement saying he was talking about capital allocation.

“We’re examining everything,” said Miller. “But it doesn’t mean we don’t run the company extraordinarily well, and it doesn’t mean it’s to the exclusion of other stakeholders, too.”

She also warned of “a little bit more noise” before GE Power recovers from a 45% drop in profits. Terming 2018 as “a reset and stabilization year” for the business which makes power plants and equipment.

”Turning it around “will take a good 12 to 18 months,” said Miller while declining to put a timeline by when she expects GE Power to post double-digit profit margins, like the ones it had in 2016.

“I think in the next couple of years, we will have good line of sight to that shift,” said Miller.

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