The contract service agreement allows for Australian companies to maintain influence in the region. The new maintenance center in Jandakot Perth, will be delivering 4,000 training days in 2013 for GE staff and employees. The Gorgon project happens to be one of the world’s largest natural gas projects. A key playing field for GE and company, and a part of an expansion in broad revenue sources.
GE announced last Thursday its plans to expand its battery business to grow around $1 billion of annual revenue by 2020. This prediction also falls in line with stepped-up goals of reaching $500 million in annual revenue within the next two to three years — significant changes in a short period of time.
The industry size of the battery market is around $50 billion annually with $5 billion located in the U.S. GE seeks a sizable portion of this industry. Benefits from the industry include customers that typically order in large bulk quantities with plans for ongoing production. Because of the nature of large bulk orders early costs are often offset completely and can even yield profit early.
The company has already received its first order from a Southern African energy company, Megatron Federal, which will be requiring backup energy resources for a telecom company.
The company will be investing $170 million in a new factory in addition to the company’s original expansion expectations of $100 million.
The plant will be located in New York and will employ 450 people. The plant received $20 million in grants from the state and local authorities. GE also holds a stake in A123 (AONE) lithium ion batteries used in hybrid cars.
Cutting the Pie in Three
GE announced on Friday that it would be breaking its energy division into three units. The move, which would allow the company to save $300 million, was prompted to create a direct connection with executives and CEO Jeffery Immelt. Under the current organization, energy executives report through one group that has one direct executive. The new system will allow three individuals to report directly to the CEO, thus sourcing candidates for the company’s highest position.
The company is not expected to replace its 11-year CEO anytime soon, but at the age of 56, plans for a successor come early on. The CEO has overseen many expansions including the energy acquisitions that built the $15 billion oil and gas business over the previous decade. Along with power turbine sales, media businesses, chemicals and insurance, the company holds large diversity in revenue streams.
The three stand-alone businesses will be power and water — the largest with $28 billion in revenue — oil and gas, and energy management — the smallest with $7 billion in revenue.
The company has maintained that the move is not intended to seek a successor but is part of a $2 billion cost-cutting effort within the company.
Second quarter profit for the conglomerate slipped 18 percent to $3.11 billion, compared with the previous year’s $3.76 billion. The earnings actually exceeded Wall Street’s expectations, with revenue up 2.5 percent. Jeffery Immelt concluded on a conference call the company should see double-digit profit growth. Profit was at 38 cents per share. Textron (TXT) and Honeywell (NYSE:HON) energy companies also found ways to show positive signs in a tough economy. The company also dismantled the technology division. On Friday the company’s stock was up .07 points, closing at $19.87.
In a rough economy and with sales down in Europe it would have been easy for the energy conglomerate to blame Europe for lower earnings, but that’s not what happened. The company exceeded analyst expectations and showed growth.
The company has also shown strongly consistent cost-cutting measures that allow for operating profits to go higher. Take for example GE Capital which merged consumer and business divisions as the economy soured – or the company’s expected $2 billion in cuts the CEO plans to undergo, or the reduction in pensions costs. With a continued push in the energy market and investments of around $11 billion, the company is on track to continue its ascent. Buy.