General Electric Co. (Boston) said it’s cutting its dividend and reorganizing its troubled GE Power unit by splitting it into two as its new chief tries to revamp the manufacturer.
GE disclosed the moves while reporting a third-quarter loss that included a pretax $22 billion writedown for GE Power.
“We will heighten our sense of urgency and increase accountability across the organization to deliver better results,” Lawrence Culp Jr., GE’s new CEO said in a statement. “My priorities in my first 100 days are positioning our businesses to win, starting with Power.”
The company pared its quarterly dividend to 1 cent a share from 12 cents. GE said it will save about $3.9 billion per year. The quarterly dividend was 24 cents a year ago.
Culp took command of GE after the company’s board of directors dumped John Flannery on Oct. 1. Flannery had been on the job for little more than a year. Culp, a former CEO of industrial company Danaher Corp., joined GE’s board last year.
GE posted a loss of $22.8 billion, or $2.63 a share, for the third quarter. The company reported adjusted earnings per share of 14 cents a share, down from 21 cents for the same period a year earlier. Analysts surveyed by Bloomberg had forecast 20 cents a share. Revenue for the quarter fell 4% to $29.6 billion.
Culp plans to reorganize GE Power into two units. One will be “a unified Gas business combining GE’s gas product and services groups” while the other will consist of “GE Power’s other assets including Steam, Grid Solutions, Nuclear, and Power Conversion.”
Under Flannery, GE concentrated on aviation, power and renewable energy. The power unit has been GE’s main problem child.
The “prospects of the continuing deterioration in its Power business…is likely to persist for some time,” Moody’s Investors Service said in an Oct. 2 report.