General Electric’s (GE) Q4 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Jeff Immelt – Chairman and CEO

No much change outside the US

“we haven’t really seen much change so far. I think if I took it by segment, the Affordable Care Act is getting the most, I would say both attention and the media and by our customers. I think you could see some caution around the Affordable Care Act as you go forward….I think outside the U.S., I really haven’t seen much change in interplay, post the election in terms of what our customers are saying and how to think. ”

 

Jeff Bornstein – SVP and CFO

Challenging environments in oil and gas.

“In oil and gas, the environment continues to be challenging and activity levels remain muted, external market indicators appear to be stabilizing with expected more balanced supply and demand fundamentals, partly influenced by the recent OPEC production agreement…2016 was an extremely difficult year for oil and gas, and the business expects the first half of 2017 will continue to remain challenging with sequential improvements in the second half of the year. ”

On healthcare segment

“Healthcare executed strongly in 2016, delivering good organic growth and operating leverage and earnings. They delivered $450 million of cost out versus $350 million target. Margins for the year expanded 100 basis points. In 2017, we expect the same focus on cost and product competitiveness with similar results. We will launch 25 new products and are targeting a point of share in 2017. We expect China, Africa and Asia Pacific to continue their strong growth. Europe is expected to be roughly stable, while the U.S. maybe a bit slower due to the uncertainty around the repeal or replace of the Affordable Care Act.”

Looking for a more competitive tax rate

“I think what GE wants and what we think is most important to competitiveness for U.S. companies is essentially a competitive tax rate, something that looks more like the OECD averages, which is just roughly 21%, 22%. And this notion of territoriality that you pay the tax in the jurisdiction that you actually earn it and then from there those earnings are fungible and can move cross border….although you may — companies may find themselves in place with a relatively lower U.S. tax liability, I don’t think it changes in anyway how they think about what their foreign tax liabilities are.”