The power division of General Electric (GE) will cut approximately 12,000 jobs worldwide, since the industrial conglomerate expects to obtain $ 3.5 billion in overall structural costs by 2018. One billion dollars come from GE Power.
X The core, but deeply affected, GE unit has been hard hit by the weak demand for gas turbines and coal plants. Traditional energy markets, including gas and coal, face "excess capacity, lower utilization, fewer interruptions, an increase in retirements from steam power plants and an overall growth of renewable energy," GE said in a statement. release.
Russell Stokes, CEO of GE Power described the decision as a "painful but necessary" decision that would help generate a change in margins and cash flow for 2019 and beyond.
But in the short term, Stokes expects market challenges to continue. "Power will continue to be a work in progress in 2018," he said.
Investors praised the news of the renewal, with the shares of the Dow component falling 1.6% to 17.93 in the first operations on the stock exchange today. But they remain at their lowest point in about five years after registering a decline in all of the months of 2017 so far, except for a 0.4% increase in February.
Among other industrial conglomerates, Siemens (SIEGY) increased 0.8% early on Thursday, Honeywell (HON) gained 0.1%. Among other Dow manufacturing giants, United Technologies (UTX) added 1% and 3M (MMM) gained 0.5%.
It is also said that Siemens is decreasing approximately 6,900 jobs worldwide, with most of the cuts coming from the energy and gas division.
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In the third quarter, GE reported a 51% drop in GE Power's profits to $ 611 million thanks to a 4% decrease in revenues to $ 8.68 billion.
The company also halved its cash flow outlook to $ 7 billion in 2018, with much of the fall linked to GE Power.
In November, GE CEO John Flannery said he will focus on three key divisions: aviation, energy and healthcare: in the future. GE plans to retire or exit others, including Baker Hughes (BHGE), the oil services business in which it has a majority stake.
The majority of GE Power job cuts will be made abroad. A third will be GE's Swiss workforce will face layoffs, while 16% of its employees in Germany could also be fired in the modernization, Reuters said.
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