Digital Industrial Company

41 Pages·2016·1.99 MB·English

Digital Industrial Company
J. R. Immelt
December 14, 2016
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Imagination at work
Framing 2017 + 2018
+ Most optimistic we have been about U.S. economy in many years … reform + general
economic growth; in addition, a lot of our markets are quite good
- Oil market is tougher than we envisioned on 4/15 … has put pressure on our business &
some of our markets … pricing has stabilized
 A few things I want you to know about GE
1 Alstom & Baker Hughes are good deals
2 Digital & Additive are gamechangers … GE is (way) out front
3 Digital & Alstom have given us new ideas on how to run GE more productively
4 We still see big opportunities in being a global company
5 We all get rewarded @ $2 EPS in 2018
2
2016 operating framework
Dec. ’15 Today
1 Operating EPS-a) $1.45-1.55 $1.48-1.52
- Organic growth 2-4% 0-2%
- Core margins + +
- Corporate-b) $2.0-2.2B ~$2.0B
- Alstom ~$.05 ~$.05 ex. FX
- FX impact ~$(.02) $(.04)-(.06)
2 Free cash flow + dispositions $28-31B $32B+
- GE CFOA-c) $30-32B $32B+
- GE Capital dividends ~$18B ~$20B
- Dispositions-c) $2-3B ~$4B
- Net P&E ~$4B ~$4B
3 Cash returned to investors ~$26B ~$30B
- Dividend ~$8B ~$8B
- Buyback ~$18B ~$22B
Tracking consistent with 3Q guidance
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(a-Industrial operating + Verticals EPS
(b-Excludes gains and restructuring & other items
(c-Deal taxes are excluded from CFOA and included in dispositions
GE is uniquely positioned
+
Leading today Tomorrow
Premium Industrial businesses
Leadership in analytics
New levels of
+ Essential … builds, & software for assets
productivity for GE,
powers, moves, cures our customers &
the world
Leadership in next
+ Valuable … foundation of
generation manufacturing
GE Store
2017 outlook
1 Build a strong Digital Industrial company
2 Invest in GE Store … a performance & competitive differentiator
3 Position to hit $2 EPS in 2018 despite oil & gas headwinds
4
Executing the bridge
Operating plan Dynamics
(Industrial operating + Verticals EPS)
~$2.00
$2 today vs. original plan 2016-2018 EPS walk
$1.60-1.70
$1.48-1.52 ∆ EPS ∆ EPS
$1.31 Original plan ~$2.00 2016E EPS $1.48-1.52
Oil & Gas related (.10)-(.15) Buyback ~.16
Capital allocation .05+ Capital allocation ~.15
‘15 ’16E ’17F ’18F
Cost actions ~.10 Operations ~.18
In line with April ’15
Today ~$2.00 2018F EPS ~$2.00
announcement
Operations ~$.18
1 Run rate … 2 New cost out program …
~3-5% + ~50 bps. ~$1B ~50 bps.
~$.10 ~$.08
organic growth margin expansion cost out incremental margin expansion
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Most valuable Industrial portfolio
Investing GE today
1 Invest in digital capability
+
+ Drive Predix, APM, thread Digital
2 Strengthen core businesses
Simple + stronger
+ Alstom
Industrial core
+ Baker Hughes
3 Capture supply chain value
+
Simplifying
4 Execute GE Capital pivot
Deeper GE Store
5 Simplify portfolio
+
Additive
6
Leadership businesses
Strong portfolio Portfolio value creation
(2017 Industrial segments + Corporate + Verticals)
+ Execute big deals that strengthen the core …
~$135B deliver growth & synergies
+ Create the leading Digital Industrial
~$19B+
+ Invest in manufacturing leadership & recapture
supply chain value … lead in Additive
Revenue Op profit
• Leadership businesses in big
+ Embrace “build + buy” in fast-growth segments
ecosystems
• Win with big technical launches
 Exit businesses where others can run better
• Diversified model … services, product,
geography  Evolve toward an industrial balance sheet …
creates incremental leverage
• Expanding margins & returns
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Baker Hughes, a GE Company
GE EPS impact Investment impact
~$.08
+ Competitive industry player:
 Unmatched capability
~$.04
Extended
 Customer value
scope
~$(.02)  Diversified in cycle
’17F ’18F ’20F
+ GE Store adds value:
Technology
 Digital/operational +
Creating “full-stream” capability
Predix
 Global scale
+ Productivity leader in Oil & Gas industry …
customer support
+ Multiple ways to create investor value:
+ Substantial cost & revenue synergies
 Earnings growth
+ Right time in cycle … capitalize on recovery  Balanced through cycles
Strong returns for GE + Baker Hughes
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The Baker Hughes transaction is subject to customary closing conditions, including approval by regulators and Baker Hughes shareholders.
Alstom integration
EPS outlook Investment impact
Grid
+ Makes GE more competitive:
~$.18-.20
 Installed base growth
~$.09-.10
 Filled product gaps
~$.05
ex. FX
+ GE Store adds substantial value:
 European restructuring Cost
'16E '17F '18F
 Global footprint
Year 1 observations
 Service & sourcing
 Digital
+ Can execute the synergies
+ Incremental growth opportunity (i.e., steam)
+ Creating investor value
Mid-teens
+ Hidden value in technology
 EPS on track for high end of returns
+ Can manage projects
range vs. original plan
- Lengthy closure process hurt value
Transaction successful for GE
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Digital Industrial leader
2017F orders
Metrics improving
$8B+
+20-30% ’16E ’17F
Developers 20K 35K+
$5B+
Partners 300+ ~500
Reference customers 50 ++
Predix-powered orders $300MM $1B+
Total Predix-powered + Productivity $500MM $700MM
software
Priorities for 2017
1 Accelerate Predix adoption … build scale
2 Grow APM & digital thread
3 Generate productivity for GE & customers
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