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The works of General Electric cut the attention in cost savings for 2018

General Electric Co. (GE) is cutting 12,000 jobs in its energy division as the industrial conglomerate works to thin out and achieve $ 1 billion in cost savings in 2018.

The cuts announced Thursday are driven by challenges in the energy market worldwide, said GE in a statement. The company noted that traditional electricity markets, including gas and coal, have been toned down and "volumes decreased significantly in products and services driven by excess capacity, lower utilization, fewer interruptions, an increase in retirements of steam power stations and the general growth of renewable energies ". [19659002] The Boston-based industrial conglomerate has told employees in Germany that some 1,600 people will be fired, along with about 1,200 in Switzerland. The overall figure can reach 12,000, said GE, a figure that would equal almost a fifth of GE Power's workforce.

GE shares rose to $ 17.71, or 0.28%, during the trading session on Thursday afternoon.

The job cuts show that GE is "focused on achieving $ 1 billion in savings to be made in 2018," said Nick Heymann, an analyst at William Blair & Co. Heymann said that GE's operational restructuring will persist in 2019 for power. division, and that this reduction in the workforce "does not include the cost cuts of 2019."

William Blair has a "Best Performance" rating in the action. Heymann said he included 10 cents for the restructuring in his fourth-quarter earnings estimate of 27 cents. "I think the only incremental restructuring costs that could probably come from non-cash write-offs and provisions related to the $ 20 billion of assets that GE expects to go out in the next 12 to 24 months," he said.

General Electric's poor earnings, cash flow and stock performance mean less complexity, however, CEO John Flannery's strategic plan does not reach $ 20 billion in asset sales and $ 1 billion in additional cost cuts, "said Karen Ubelhart, senior industry analyst at Bloomberg Intelligence." The $ 1 billion cost reduction in Power, its largest unit and where much of the restructuring is concentrated, including an 18 % reduction of personnel, are positive steps and could be a sign that GE will advance quickly. "

" Given the challenges of power markets, today's announcement represents an obvious next step in the reduction of the workforce and the footprint to improve margins and cash flow within the distressed business, "continued McCarthy, who kept his" Hold "rating on GE stock with a target price of $ 20.

GE said its power unit will continue to be in progress by 2018. "We expect the market challenges to continue, but this plan will position us for 2019 and beyond," the company said.

"The business of power has collapsed," said Jim Cramer of TheStreet on CNBC. "It's fossil fuel: the world is going fast against fossil fuels, we do not need more [power] plants."

Notably, GE leads US companies by announcing the largest number of jobs this year, according to Bloomberg. The company has eliminated a total of 19,242 jobs in 2017, ahead of General Motors Inc. (GM) and Macy's Inc. (M).

Cramer, who has GE in his charitable trust, Action Alerts PLUS, said he intends to buy more than GE, somewhere under $ 18.

General Electric is participating in Jim Cramer & # 39; s Charitable Trust portfolio of Action Alerts PLUS. Would you like to receive an alert before Cramer buys or sells GE ? Get more information now .

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