GE to split into three companies

GE will split itself into three independent companies focused on key functions—aviation, health care and energy.

The company will spin off its health care division in early 2023 with the energy business following in 2024. Aviation will remain headed by GE’s current chairman and CEO, Larry Culp. Scott Strazik, currently CEO of GE’s Gas Power unit, will lead the Renewable Energy + Power + Digital company.

“The world demands—and deserves—we bring our best to solve the biggest challenges in flight, healthcare, and energy,” GE CEO Lawrence Culp said in a statement. “By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees.”

The announcement about GE’s split up came as the company announced its third-quarter results for 2021.

In the company’s power segment, orders of US$3.7 billion increased 8% reported and 6% organically, driven by gas power services, aeroderivative equipment, and steam, each up double digits. Gas power equipment orders were down despite booking six more heavy duty gas turbines, largely smaller frame units. Revenues of $4.0 billion were flat reported and decreased 1% organically. Equipment revenue was down with reduced turnkey scope at gas power and the continued exit of new build coal at steam. Services was up, with gas power services up high single-digits, trending better than initial outlook, due to strong long-term service agreement volume, the company reported.

Larry Culp

GE now expects gas power services to grow high single digits this year. Segment margin of 5.1% expanded 140 basis points reported and 130 basis points organically, largely due to positive mix from services and aeroderivative shipments at gas power, as well as margin expansion at power conversion. GE remains on track with the continued exit of new build coal in steam power.

GE’s decision to split itself follows a similar action by Siemens, which spun off its energy division in 2020. Siemens Power products include, among other things, combined cycle turbines, generators, transformers and compressors. In the area of wind turbines, Siemens Energy also hlods a 67% stake in Siemens Gamesa Renewable Energy.