GE will withdraw from lighting business
On July 23, according to foreign media reports, the restructuring of the US General Electric (GE) business entered the final stage. On July 20, local time, it was announced that it will withdraw from the ancestral lighting business in 2018.
General Electric Finance Officer (CFO) Jamie Miller announced on December 20th, the April-June 2018 earnings conference call "scheduled to sell lighting business during the year." The company's lighting business has previously withdrawn from the European, Middle Eastern and African markets, and will soon sign a sale contract for the US lighting business. Jamie Miller did not disclose the sale, but the US media speculated that it might be sold to Chinese companies. GE plans to complete a series of business sales and restructuring by 2020, compressing $25 billion in interest-bearing liabilities. In the context of the Fed’s interest rate hike, the company’s interest burden has been reduced, but the business level still faces many issues.
According to reports, in seven major businesses, such as medical devices and transportation, GE will spin off and sell four, focusing on three divisions: electricity, aviation and renewable energy. GE will bid farewell to the past integrated business model and act as a "Simple GE".
GE's quarterly profit fell 28% as the downturn in the power business offset the growth of the airline and health insurance business. At the earnings call, GE said that the company will focus on aviation, power and renewable energy businesses in the future. The company's CEO, John Flannery, said the company's biggest challenge remains the power business.
The downturn in the power business has become an uncertain factor in GE's transition, and GE's “easy going” strategy also depends on the completion of the sale plan, including the lighting business.
Although the lighting business is GE's most symbolic business segment, in 2017, sales of this business fell sharply by 59%, bringing only GE's $93 million in profits. The lighting business's revenue accounted for only 2% of GE's overall revenue. In addition, the lighting industry's profit margin is too low, and almost no future earnings prospects are seen, making it an abandoned player in GE's transformation process.
In March of this year, Reuters quoted sources as saying that at least two Chinese companies are preparing to bid for GE's lighting assets, and the transaction size may reach $1 billion.
One of the sources said that Mulinsen and Foshan Lighting are negotiating with the lender to finance the possible bidding for the above assets. Both companies are lighting manufacturers in Guangdong.
Another source said that GE would release information about the sales process for parties interested in bidding, and then send an information memo, followed by the first round of bidding.
According to GE's plan, by 2020, a series of business sales and restructuring will be completed, compressing $25 billion in interest-bearing liabilities.