GE Capital Senior Vice President CEO, Global Growth JEFFREY R
Total Page：16
File Type：pdf, Size：1020Kb
A NEW KIND OF INDUSTRIAL COMPANY GE 2014 ANNUAL REPORT WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e GE’s mission is to invent the next industrial era, to build, move, power and cure the world. GE imagines things others don’t, builds things others can’t and delivers outcomes that make the world work better. GE brings together the physical and digital worlds in ways no other company can. In its labs and factories and on the ground with customers, GE is inventing the next industrial era to move, power, build and cure the world. On the cover: Christie Drabic, Richard Simpson, Foday Bayon (seated in locomotive) and Dennis Peters, GE Transportation WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e GE EXECUTIVE TEAM Back row MARK M. LITTLE DANIEL C. KEITH S. SHERIN Front row SUSAN P. PETERS BETH COMSTOCK (left to right): Senior Vice HEINTZELMAN Vice Chairman, (left to right): Senior Vice Senior Vice President President and Chief Vice Chairman, GE, and Chairman President, and Chief JOHN G. RICE Technology Offi cer Enterprise Risk and Chief Executive JAMIE S. MILLER Human Resources Marketing Offi cer Vice Chairman and and Operations Offi cer, GE Capital Senior Vice President CEO, Global Growth JEFFREY R. IMMELT and Chief JEFFREY S. Organization Chairman of the Information Offi cer BORNSTEIN Board and Chief Senior Vice President Executive Offi cer BRACKETT B. and Chief DENNISTON III Financial Offi cer Senior Vice President and General Counsel 2014 PERFORMANCE 2015 GOALS 2014 GOALS 2014 RESULTS Grow Industrial segments 10% 10% 1 Industrial Operating EPS: $1.10–$1.20 Organic revenue growth 4%–7% 7% • Double-digit EPS growth Margin expansion + 50bps • Margin expansion Disciplined/balanced capital allocation 2 GE Capital Operating EPS: ~$0.60 GE CFOA $14B–$17B $15.2B • EPS could be lower if ENI reduced faster than expected Buyback + dividend $10.8B Dispositions $3.0B $4.7B announced 3 Free Cash Flow + Dispositions: $12B–$15B GE Capital GE Capital earnings ~$6.7B $7B Cash Returned to Investors: $10B–$30B GECC dividend $4B $3B 4 • Dividend + Synchrony split-off Key Transactions (announced) Alstom Power & Grid | Synchrony IPO | Appliances disposition GE 2014 ANNUAL REPORT 1 WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e LETTER TO SHAREOWNERS A New Kind of Industrial Company Companies and leadership teams go through cycles. Sometimes companies play it safe, defend the status quo or manage momentum. Not GE. We have the ambition to lead the next generation of industrial progress. So we have been profoundly changing our company. We have reshaped the portfolio from a broad conglomerate to a more focused infrastructure leader and took important steps in that pivot last year. We invested in enterprise capability that allows GE to win in a volatile world. We lead the merger of machines and analytics through the Industrial Internet to drive new levels of productivity. We positioned our businesses to achieve superior customer outcomes. And, we ran the Company in a simpler, faster and more accountable way. We have rebuilt GE in a volatile economy, one that favors only the most competitive. > % % CAPITAL INDUSTRIAL GE STRATEGY Portfolio goal for 2016 The world’s best infrastructure company, with a valuable specialty fi nance business 2 GE 2014 ANNUAL REPORT WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e LETTER TO SHAREOWNERS We are creating a more valuable GE for you. strategic investment brings complementary $100 billion of acquisitions and disposi- From 2014 to 2016, we are focused on products and services in power and greatly tions. This includes major investments to delivering an important fi nancial pivot. This strengthens GE’s position in the grid sector. strengthen our infrastructure portfolio, includes: growing EPS each year; achieving Alstom will benefi t from GE’s strength in substantially reducing fi nancial services 75% of our earnings from industrial busi- technology, service and in growth markets. and selling businesses where we lacked nesses; returning $50 billion to investors; competitive advantage. Going forward, GE and growing margins and returns. In 2014, In July, we began the spinoff of Synchrony is built on businesses that fi t our strength our share performance trailed S&P 500 Financial, our Retail Finance business. GE and purpose. returns; over the past fi ve years, our total still owns 85% of this new company, cur- returns grew by 96%. And, we are convinced rently valued at $26 billion. By the end of GE remains unique in the sense of combining that this pivot will deliver a much higher 2015, we expect to spin this company to industrial strength with a signifi cant fi nan- valuation over time. GE investors in a capital-effi cient exchange cial services capability. To be clear, GE is for about 8% of our shares outstanding. an industrial company fi rst and foremost. Today, we offer you consistent growth in GE Capital must enhance our industrial a volatile world, with a strong dividend In September, we announced the sale of competitiveness, not detract from it. We yield. Our businesses are performing well. our Appliances business to Electrolux for see a signifi cant advantage in our ability We have a foundation of broad and deep $3.3 billion, a good price which will generate to bring fi nancial solutions to industries competitive advantage. Our best days are a pretax gain of more than $1 billion. Despite like aviation, energy and healthcare. But ahead of us, and we are determined to our 100-year history in appliances, the make no mistake, the ultimate size of GE deliver for you. business did not fi t our core strengths, nor Capital will be based on competitiveness, was our competitive position favorable. returns and the impact of regulation on A Year of Purposeful Portfolio Moves We believe that the capital can best be the entire company. In 2014 we continued to reshape the deployed elsewhere.1 Company. The result of these moves is a strong, multi- These portfolio moves cap a decade where business industrial company, and proudly In May, we announced an agreement for we repositioned GE as a more focused, so. Each of our businesses is a leader in the acquisition of Alstom’s Power & Grid busi- high-value industrial company. During this their industries. Our diversity gives GE the ness, the largest in GE’s history. This highly time, we have completed more than fi nancial strength to capitalize on cycles OUR STRATEGIC CHOICES 1. The Alstom, Synchrony and Appliances transactions are each subject to regulatory approval. GE 2014 ANNUAL REPORT 3 WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e HA-TURBINE The largest, most fuel-effi cient gas turbine in the world, which can save our customers millions of dollars every year on fuel costs. Using a FastWorks approach, the GE Power & Water team launched the turbine in just under two years, bringing it to market in about half the time traditionally required. >950,000 UP TO POUNDS 510 MW OPERATES OF ELECTRICITY OVER GENERATED 2900˚F OVER 61% 3,000 EFFICIENT SENSORS >$10M PER UNIT IN ADVANCED MANUFACTURING IMPACT ANNUAL FUEL • Improves turbine performance 1 SAVINGS • Boosts fuel range and effi ciency • Increases speed to market 1. Compared to today’s F-class and fuel cost of $10/mmbtu. 4 GE 2014 ANNUAL REPORT WorldReginfo - 603b4ae8-758d-4601-9af6-964e4102a21e LETTER TO SHAREOWNERS and uncertainty. And, we generate incremen- engine will power the next generation of tal earnings through our shared capabilities, narrow-body aircraft and is 15% more harnessing the value of collaboration. fuel-effi cient than the engine it replaces. Since launch, we have captured 79% market share, Building Valuable Businesses and LEAP is the fastest-growing engine in our GE leads in power, healthcare, aviation, water, history. Similarly, the H turbine is a technologi- transportation, and oil & gas—the infrastruc- cal marvel—the largest, most fuel-effi cient gas ture markets that move, power, cure and build turbine in the world—and will save our cus- the world. We compete in infrastructure tomers $8 billion per year on fuel. It is on pace markets because they are big, growing and to be one of our most successful gas turbine essential for global economic progress. launches in history. We estimate that more than $70 trillion will be invested in infrastructure by 2030. We deliver customer outcomes. GE is the BLADE TIPS only company positioned to deliver locomotives MOVE AT Leadership in infrastructure requires breadth that meet new EPA standards in 2015. This and depth. This is how we win. machine is a modern miracle. The Tier 4 loco- 1,200 motive’s emissions are 76% lower in nitrogen MPH We innovate at scale. In 2014, we launched oxide with 85% fewer particulates than our two products that will generate $100 billion engines from 10 years ago. We invested ahead of revenue over their lives. The CFM LEAPTM jet of demand, fi nishing our product to be ready for 2015 deliveries. As a result, GE was ready and our competition was not, allowing us to capture the majority of the market, shipping more than 2,000 locomotives over the next two years. HA-TURBINE TEAM We solve global problems. GE is the largest The HA-Turbine team has produced the world’s industrial multinational, with about $80 billion largest and most effi cient H-Class turbine. of revenue outside the U.S. This allows us to execute projects that others can’t. In Ghana, GE will bring 1,500 MW of electricity to a Back row (left to right): Jim Sutton, John Lammas and Brenda Reynolds. Middle row (left to right): Jim Suciu, Scott Strazik and Jatila Ranasinghe. In front (left to right): Monte Atwell and Vic Abate.