How GE Makes Money

General Electric Co. (GE) is a global industrial company that provides power generation, renewable energy, and industrial aviation products. GE serves customers almost 170 countries and has manufacturing and service operations globally.

GE operates in industries that require continual investment in research and development. Major competitors include Honeywell International Inc. (HON), 3M Co. (MMM), German-based Siemens AG (SIEGY), and France-based Schneider Electric SE (SBGSF).

GE’s Financials

GE has refocused its operations on aviation, executing a plan to split its businesses into three separate and independent public companies. In 2023, the company completed the spin-off of its healthcare business, so it currently makes money manufacturing and operating commercial and military aviation parts, gas turbines, and renewable energy solutions.

The company reported a net gain attributable to its common shareholders of $7.36 billion, a significant increase from the previous year’s deteriorating $1.2 billion loss. Total profit from all segments was $987 million.

GE’s total revenues were $14.5 billion in the first quarter, up 7.6% YOY. Excluding the corporate segment, the company’s total segment profit rose 13.9% YOY to $13.6 billion.

In its earnings press release, the company highlighted its solid profit margin, earnings per share (EPS), and free cash flow performance in FY 2023.

GE’s Business Segments

GE operates through three industrial segments: Aerospace, Renewable Energy, and Power. It also has an additional segment it calls Corporate, which it uses to account for revenues and earnings that are not included in the other three segments.

Aerospace

The Aerospace segment designs and produces commercial and military aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. It also provides aftermarket services to support its products.

The Aerospace segment’s profit rose nearly 46% YOY to $1.3 billion in Q4 FY 2023. It composed about 51% of total profit (including profit from the corporate segment). Quarterly revenue rose 24.6% YOY to almost $7 billion.

Renewable Energy

The Renewable Energy segment offers renewable energy generation products, services, and integrated solutions. It provides onshore and offshore wind, blades, hydro, storage, grid solutions, and hybrid renewables.

The Renewable Energy segment’s income loss lessened to -$414 million in Q1 FY 2023 from -$434 million YOY. Revenue for the segment dropped slightly to $2.83 billion from $2.87 one year before, composing about 21% of companywide revenue.

Power

The Power segment provides products and services related to energy production. Its products and technologies utilize oil, gas, fossil, diesel, and nuclear to produce electric power. This GE segment offers gas and steam turbines, a full balance of plant, upgrade, and service solutions, and data-leveraging software.

The Power segment’s profit rose to $75 million in Q1 FY 2023. It composed 7% of total profits. Revenue rose to $3.8 billion. It accounted for about 28% of GE’s total revenue.

Corporate

The Corporate segment includes results for GE’s disposed businesses, certain amounts not included in operating segment results, and certain costs of the company’s principal retirement plans, high-cost restructuring programs, and other costs. The segment includes the results of the GE Digital business and the company’s remaining GE Capital businesses.

The Corporate segment’s profit rose 284.5% YOY to $5.5 billion in Q4 FY 2021, due to accounting for profits from discontinued operations. It composed about 19% of total segment profits during the quarter. Revenue for the segment rose 21% YOY to $848 million, accounting for about 6% of the total revenue for the company.

GE’s Recent Developments

In January 2023, GE completed a planned spinoff of its healthcare company, now GE Healthcare. Its next spinoff is its Renewable Energy and Power businesses (soon to be combined and called GE Vernova), which is expected to complete in the near future.

GE also expects the sale of its Steam Power nuclear power activities to EDF, a France-based electric utility company, will complete in the second half of 2023. The transaction includes the Steam Power unit’s conventional island equipment for new nuclear power plants, maintenance and upgrades for existing nuclear power plants, and steam turbine technology for future nuclear plants. GE would retain a steam power business focused on providing nuclear turbine services. The agreement is a further example of GE’s efforts to divest parts of its business outside its core aerospace focus.

The Bottom Line

General Electric has been a staple in the U.S. economy for more than 125 years. After suffering substantial financial difficulties in the first two decades of the twenty-first century, it is still working to regain its standing. It has restructured and rebranded itself as an aerospace company and divested other endeavors to focus on its most profitable segment.

GE was profitable in the first quarter of 2023 and expects to maintain its profitability in the future with the momentum it claims to have created with its new strategy.