General Electric Company (GE - Free Report) yesterday announced that will lay off as many as 1,200 jobs in Switzerland, all related to its power generation business. Notably, this plan is a part of the company’s cost-reduction initiatives announced in 2017.
In this context, it is worth mentioning that 1,200 job cuts in Switzerland are comparatively lower than originally decided 1,400. The latest retrenchment will likely impact roughly 230 employees in Birr, 920 in Baden and 50 in Oberentfelden.
General Electric’s Cost Reduction Plan
GE Power — a General Electric company, headquartered in Schenectady, NY — announced its costs-reduction plan in December 2017. It communicated its plan to lower global workforce by 12,000.
This move along with other initiatives taken during 2017 is expected to help GE Power in achieving its $1 billion target of structural costs reduction in 2018. Additionally, these initiatives will strengthen GE Power’s ability to tide over issues in the global power market as well as enhance its competitiveness compared with other global players in the same space. Operational excellence, enhanced cash flows, improved margins and increased shareholders’ value are other anticipated outcomes.
General Electric’s Power segment engages in the production of gas, steam and aero derivative turbines as well as generators and combined cycle systems. In the first quarter of 2018, this segment contributed roughly 26.4% to the company’s Industrial revenues. Structural cost reduction in the quarter was $354 million while it totaled approximately $0.8 billion in 2017. In the last six months ended March 2018, the segment closed as many as 17 sites.
For the entire Industrial business, reduction in structural costs (driven by Power, Oil & Gas and Corporate) was roughly $0.8 billion in the first quarter of 2018. Markedly, these efforts are part of GE Electric’s plan to lower its structural costs in 2017 and 2018 by $3.5 billion.
Zacks Rank & Key Picks
With a market capitalization of nearly $114.6 billion, General Electric currently carries a Zacks Rank #3 (Hold). The company’s Zacks Consensus Estimate is pegged at 95 cents per share for 2018 and $1.01 for 2019, reflecting decline of 1% and growth of 1% from the respective 60-day-ago tallies.
General Electric Company Price and Consensus