Energy Connections and Lightning revenue
Now, we’ll take a look at General Electric’s (GE) Energy Connections and Lighting segment. In 2Q17, this segment reported revenue of $3.2 billion, a fall of 2% excluding the sale of its appliances business. On an all-inclusive basis, the Energy Connections and Lighting segment’s revenue fell 27% in 2Q17.
The segment’s operating profit was $80.0 million, almost flat excluding the appliances business. Its operating margins, however, improved 2% to 2.5% in 2Q17. At the beginning of 2017, General Electric announced its plans to divest its consumer lighting business. This was another step toward making GE a purely industrial digital company.
Energy connection revenue rose 4% organically in 2Q17 on account of strength in grid and industrial solutions. Lighting revenue fell 9% due to divestitures and business restructuring by General Electric.
Energy Connections and Lighting orders
The Energy Connections and Lighting segment’s orders were $3.0 billion in 2Q17. Energy connection orders totaled $2.6 billion, and current orders totaled $380.0 million. The 12% fall in energy connections orders was on account of the lower grid and the absence of a large Egyptian order in the quarter. Power conversion orders also fell 14%. The fall was partially offset by slightly higher industrial solutions orders.
In 1Q17, General Electric announced that it would consolidate its Energy Connections segment with its Power segment in 3Q17. With this consolidation, the company is aiming for a structural cost reduction going forward.
GE is mulling the sale of its industrial solutions business in 2H17 along the same lines as its consumer lighting business (PHG) divestiture.
Investors with interest in large-cap stocks may want to opt for the SPDR S&P 500 ETF (SPY). General Electric makes up 1% of SPY’s portfolio holdings. Other big industrial names in SPY include Berkshire Hathaway (BRK-B), 3M Company (MMM), and Boeing (BA).
Next, we’ll focus on GE’s 2Q17 operating margin.