New York, Oct 1 (AFP) Embattled US engineering giant General Electric on Monday removed its CEO and warned it would fall short of its 2018 earnings guidance as the conglomerate’s cash flow struggles continue.
The ouster of John Flannery, a 30-year GE veteran, comes barely a year after he took over in a bid to rescue to the company, long a pillar of American industry that has seen its shares tailspin 35 percent since the start of the year.
The company was stricken from the prestigious Dow Jones Industrial Average in June.
H Lawrence Culp, named to the GE board in April, will replace Flannery immediately, the firm said in a statement, following a unanimous decision of the board.
The company said because of weaker performance in the GE Power business, GE would fall short of previous profit guidance for this year.
GE will also book a USD 23 billion non-cash charge related to its power business. Executives are due to brief investors on the charge when GE reports third quarter results later this month.
The once mighty conglomerate, long a standard-bearer of US industrial preeminence, is still working to right the ship following the global financial crisis of a decade ago, which blew a hole in GE’s once-massive lending business.
Shares of GE last week hit a nine-year low, after news of a glitch in new power-plant turbine technology that temporarily shut two electricity plants in Texas – adding to woes in the company’s industrial segments.
A year into Flannery’s tenure, investors were reportedly concerned he was not working fast enough to restructure the company.
Last week, shares in the company fell seven percent, pushing GE’s market capitalization below USD 100 billion and causing Wall Street analysts to cut their price targets.
As the problems in Texas occurred, Flannery held an emergency meeting last week, calling on staff to “fight for the company,” according to The Wall Street Journal.
“GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company,” Culp said in the statement.
“We remain committed to strengthening the balance sheet including de-leveraging.” In addition to adding Culp to the board, GE also appointed Thomas Horton, the former chief executive of American Airlines and AT&T, as lead director – citing his experience with corporate restructuring in the merger of American and US Airways.
The company’s stock was up more than 15 per cent in pre-market trading in New York shortly before 1300 GMT. (AFP) MRJ MRJ
This is published unedited from the PTI feed.