Profits in GE’s power division have fallen 51% overall, a result blamed by the group’s management as a major factor in producing the ‘disappointing’ performance revealed in its quarterly results, announced on 27 October.
GE reported lower third-quarter earnings and has cut its full-year forecast. Net profit for the quarter ending September 30 was $1.8bn, down 9.7 % from the same period in 2016.
Revenues and profits fell sharply in the power division, where the market for gas turbines remained weak and the company wrote down $1.2bn of assets.
The business suffered from "poor execution" that resulted in project delays, according to Jeff Bornstein, GE's outgoing chief financial officer. GE hopes to repair this weakness in its power division’s by cutting costs and replacing management.
Bornstein said GE had misjudged the power market, overinvesting in capacity that it could not sell, and not moving quickly enough to cut costs.
“We have a tough 2018 in front of us but feel optimistic about the business beyond that,” Bornstein said of the division.
Newly installed chief executive John Flannery has promised to turn things around by tackling problems besetting the business as a whole. “It’s clear we need to make some major changes,” he said. “Our results are unacceptable to say the least.” He stated that a comprehensive plan would be introduced in November and described 2018 as a “reset year.”