GE chops dividend 50% amid new focus on power, aviation

by BLOOMBERG

NEW YORKGeneral Electric Co’s (GE) new boss is shrinking the company and slashing the dividend as he wrestles with one of the biggest slumps in the industrial behemoth’s 125-year history.

CEO John Flannery is planning to focus on aviation, power, renewable-energy and healthcare equipment when he unveils his plan for GE at an investor meeting yesterday, said a person familiar with the matter. He’s also preparing to exit some other businesses, and cutting the quarterly payout in half — only the second reduction since the Great Depression.

The extraordinary steps underscore the severity of the challenges facing Flannery, who is readying dramatic changes three months after taking the reins from Jeffrey Immelt. GE, plagued by poor cashflow amid slumping markets in power generation and oil-field equipment, is by far the biggest loser on the Dow Jones Industrial Average this year.

Flannery already has made changes to top management, sought deep cost cuts and welcomed a representative of activist investor Trian Fund Management to GE’s board.

The quarterly payout will drop 50% to 12 cents (RM0.50) a share, the Boston-based company said in a statement yesterday, in a move that will save about US$4 billion a year. GE last reduced the dividend in 2009 as it struggled with fallout from the financial crisis.

“We understand the importance of this decision to our shareowners and we have not made it lightly,” Flannery said in the statement. “We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cashflow generation.”

GE in October slashed its expectations for 2017 profit and cashflow as Flannery called the company’s performance “completely unacceptable”. — Bloomberg