Imagination at work. J. G. Rice November 12, 2014 Forward-Looking Statements: This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding, GECC’s exposure to counterparties and our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial that could prevent us from completing the Synchrony split-off as planned; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions, such as the proposed transactions and alliances with Alstom, and our ability to realize anticipated earnings and savings; our success in integrating acquired businesses and operating joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. “This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.” In this document, “GE” refers to the Industrial businesses of the Company including GECC on an equity basis. “GE (ex-GECC)” and/or “Industrial” refer to GE excluding Financial Services.” GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted. Global Growth
Transcript
Imagination at work.
J. G. Rice November 12, 2014 Forward-Looking Statements: This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including interest and exchange rate
volatility, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding, GECC’s exposure to counterparties and our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial that could prevent us from completing the Synchrony split-off as planned; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions, such as the proposed transactions and alliances with Alstom, and our ability to realize anticipated earnings and savings; our success in integrating acquired businesses and operating joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. These uncertainties may cause our actual future results to be
materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. “This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.” In this document, “GE” refers to the Industrial businesses of the Company including GECC on an equity basis. “GE (ex-GECC)” and/or “Industrial” refer to GE excluding Financial Services.” GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
Global Growth
Global themes
Bigger pipeline … better, faster, more focused to win
Job creation
Populism (Sustainable, Inclusive growth)
Aging population
Environment
Transparency/Anti – corruption
Regulatory activism
Urbanization
Energy security
Efficient solutions (cost/unit)
Access by all …“Portable, accessible”
Capability & capacity building
Financing solutions
Macro themes Continued demand for infrastructure
2
Global economic backdrop
$ exchange rate and oil prices
$ real effective exchange rate
Mexico: Strong reforms & US exports
SSA, MENAT: Big infrastructure projects
India: Lower inflation, improving confidence
Japan: Moderate growth, strong QE
Korea: Monetary/fiscal room to support growth
+
-
Brazil: Weak fundamentals, productivity
Russia: Geopolitical tensions, oil
China: Slower growth, adjusting imbalances …
risk of correction
Eurozone: High debt, fiscal tightening &
abating confidence
2013 1990
2014 2000
3
Orders
Acceleration in Growth markets
Key geographies … long term commitment
Implementation of localization strategies
Big growth themes … investing to win
Expansion in new markets
Build partnerships
Imperatives
18 19
29
46
$50 $65
$47
’10 ’13 ’14YTD
11% CAGR
Growth
Developed
11% YTD
Global (%) 60% 63% 63%
14
36 17% CAGR
16% YTD
($ in billions)
Imperatives for driving growth
4
Key geographies …
MENAT
Opportunity amidst volatility
’13 ’14 E ’10
$12.2
$8.5
++ 13% CAGR
Tech leadership GE9X & services
Enabling Saudi
BPO, Efficiency Sol.
Powering Algeria 2013 8GW Deal
China
$7.5
’13 ’10
$4.0
’14 E
+
China mega needs by 2020
Affordable healthcare Delivering localized
products & services
Partnering with state champions
to deliver Clean
Energy solutions
Mass transportation 1,100 a/c fleet
expansion in the next 5 years,
powering C919
24% CAGR
(Orders $ in billions)
5
Sub-Sahara Africa
Key geographies …
$3.5
’13 ’10
$1.7
’14 E
++
GE Africa … shifting to the next gear
Latin America
$8.6
’13 ’10
$5.1
’14 E
+ 19% CAGR
Localization and execution
Innovation … Joint investment
programs
GRC - Brazil
Organized around key
accounts
Focus on solutions … Marine/FPSOs &
Gas to Power
+
28% CAGR
(Orders $ in billions)
Gas to Power solutions
Local footprint … Nigeria, Ethiopia,
Mozambique
Financing / Project Development
6
Path to global growth
Speed + process
People
Presence …. what we do & where we do it
Partnerships … access & expertise
Financing + Global technology platforms
Faster, more responsive to local needs
Decision making + accountability
Targeted products
New markets & capabilities Multi-modal leverage
Growth markets headcount
Leadership 750 Commercial 10,000 Services 8,500
’13 Local knowledge & capability
7
Big growth themes … gas to power entitlement
~935 GW
~1,400 GW
Gas power capacity -> 2020
Multiple gas solutions needed
• Small … Remote gas & virtual pipeline
• Mid … Floating LNG, regional pipeline
• Large … Mega int’l pipeline & LNG
Growth beyond OEM business
Gas-to-Power “… enabling availability of natural gas for power generation”
2014 2020
Gas based GW outside the US
GE opportunity
50+ GW
Ghana 1000
• Government priority … consortium
established, 6 months ahead of schedule
• Targeting 1000 MW power park by 2016
• Fuel solution … supply & lower cost
• Local strategy … ownership, suppliers, jobs
• $500MM GE opportunity
8
'10 '13 '17F
Orders
Investing in technology, localization & project development … well positioned to win
$5.7
++
# of countries 2003
8
2015 35+
Global biz
Big growth themes … Wind
Need for clean energy across the world
47GW+, $45B+ annual opportunity
GE well positioned to win
- Technology
- Localization
- Project development
- Execution capability
$4.4
Invest to win
Global $1.3
$1.8
+++
US
($ in billions)
9
'10 '13 '14E
Presence in new markets
Big opportunities … continue to prioritize and invest
Good track record… The next ten…
• O&G / P&W lead; Healthcare next
• Selective investment to build footprint
• Create minimal infrastructure
• Common theme … localization
• Country leaders / commercial resources
• Values and voice
$4.1B
$0.4B
'10 '13 '17F
++
$0.8B
Turkmenistan Philippines
Myanmar Kenya Argentina Kazakhstan Tunisia
Ethiopia Mozambique Bangladesh Indonesia Peru Ghana PNG
Ecuador
Bolivia
+
$ --
Yemen
Oman
Tanzania
Uzbekistan
~10X
10
(Orders $ in billions)
Presence … with new capabilities
Substantial competitive advantage
Haiphong, Vietnam Pune, India
Greenfield plant … local & export markets
P&W, O&G, Aviation and Transportation
400 local employees
~$130MM investment … 3 year payback
$400MM+ output in ’15 … annual savings
$100MM+
Local plant … local & export markets
Wind and O&G
600 local employees
~$65MM investment in ‘09 … 3 year payback
$150MM output in ’15 … annual savings
~$30MM
11
Partnerships … access & expertise
GE + AVIC
50/50 JV
Integrated avionics
systems
C919 launch
Global technology platforms
Algeria
Powergen Products
49/51 JV
Manufacturing &
assembly of equipment
Operational in ’17
Orders ~$500MM+ p.a
Localization Financing
Kenya
100MW: 60 x 1.7-103
$2.3MM investment …
$4.3MM payback
~$120MM EPT plus FSA
Kipeto Wind
12
+ First mover in localization
+ Understanding & aligning with
government priorities
+ Creating solutions for new markets
+ Ensuring joined-up investing decisions
+ Understanding & managing risks
+ Driving site costs & structure synergies
How GGO adds value GGO organization
Leadership & structure
Supply Chain / Multi-Modal
Process
Marketing
Commercial Operations
Commercial Finance
Centers of Excellence
Supplier development
Programs
Growth & localization
Local development
Sales & Project Finance
Leadership development
Speed & process
Strong regional & functional leaders 13 regions Complementary to business segments
13
Breakthrough product at cost point to enable broad access
Speed & process … leveraging global expertise in Healthcare
Vscan - Access Chengdu CIC
Customer forum
Industrial design
Usability
Teardown
Software Applications
• Software Project management
• Local protocol / language
• Focus on low cost, reliability and design
• Unparalleled reliability
• Low cost: portable
Market input
China Mfg
Eng. Centers
Indonesia
India
Software Center
India
US Norway
• Beam forming, systems knowledge and IQ optimization
• Clinical expertise
• Stand out product
• Clinical features for developing world
14
Anatomy of a win … Algeria
People
Presence
2 offices, 2 facilities, 3 training centers
600+ employees, 300 engineers
Good service relationships
>10 officer + visits in 2013
8+GW power generation … $2B Order
Experienced CEO
Legal Counsel (9 yrs local experience)
GM Powergen Services (Corporate Audit Staff)
Process
Partnerships
Consistent over time
Building local capacity & capability
Knowledge, speed & agility
Local, expertise & leadership
Teamwork … across 6 time zones
Clear local authority + accountability
Early involvement of global supply chain & engineering
Credible partner since 1993 (Algesco Services JV; Water; Ministry of Health)
Technical training + leadership development
15
Summary
‘13 ’17F
Delivering solutions to meet
customers needs
Investing to build capabilities; innovation & supplier ecosystems
Leveraging global cost & scale
Training and developing leaders/ people in more places
