'Purpose-built' | GE Vernova makes debut on New York Stock Exchange following spin-off
General Electric's former energy unit now operating as a separately listed company and targets wind profits
Power and wind equipment giant GE Vernova made its formal market debut under the ticker symbol GEV today (Tuesday), completing its spin-off from US-based parent General Electric.
It closed up 4.13% to $147.89 a share on the New York Stock Exchange (NYSE). Shareholders of record of GE common stock received one share of GE Vernova voting stock for every four GE shares that they held as of 19 March.
With its global headquarters is in Cambridge, Massachusetts, GE Vernova enters the S&P 500 index, which tracks the stock performance of 500 of the largest companies listed on US stock exchanges.
"Today, GE Vernova becomes an independent company singularly focused on accelerating the energy transition to create a more sustainable future," said CEO Scott Strazik. He described the company as "purpose-built to electrify and decarbonise the world."
General Electric today also relaunched on the NYSE branded as GE Aerospace, keeping the GE ticker symbol.
The re-branding ends General Electric's almost 132 years of existence as one of the world's best known companies. It was formed through the merger of several companies, one of whom was founded by legendary inventor Thomas Edison.
'Significant uplift'
GE Vernova begins life comprising three businesses that had about $34bn revenue in 2023, with 80,000-plus employees across more than 100 countries.
Wind includes onshore and offshore turbines, and LM Wind Power, which designs and manufacturers rotor blades. The business had about $9.9bn revenue and is among the world’s largest OEMs onshore. It is the top supplier in the US market, the second largest globally after China.
Power encompasses gas, hydro, nuclear, and steam technologies with $17.4bn revenue, while electrification embraces grid and storage ($6.4bn). These two businesses are profitable.
Wind CEO Vic Abate told investors last month that his business will achieve a “significant uplift” this year in earnings before interest, taxes, depreciation, and amortisation (Ebitda), citing "price, productivity and cost savings." Wind lost $1bn in 2023.
Abate said he expects that greater US volume starting in the second half will result in high single-digit Ebitda margins for onshore, as projects take greater advantage of lucrative federal tax credits in the US climate law after Department of Treasury clarification of final guidance.
Offshore wind, in turn, is expected to see slight improvement as GE Vernova works through an unprofitable backlog of Haliade-X deliveries, mainly in Europe.
Profitable wind
Against this backdrop, GE Vernova anticipates that the wind business will become profitable in 2025, driven by a higher onshore margin and “meaningfully lower losses” at offshore on “higher deliveries and productivity.”
According to the OEM, its wind revenue last year was 12% of the global addressable market — the total amount of revenue those products and services could possibly generate for that segment.
Equipment comprises about 85% of revenue including new turbines and repowerings. The other 15% is services, including long-term agreements and “transactional” business for spare parts and repairs in support of planned maintenance outages.
Aggressive restructuring
The simultaneous GE Vernova spin-off and GE Aerospace launch culminates five years of aggressive restructuring of General Electric, whose conglomerate business model fell into decline partly as a result of the 2009 financial crisis.
At that time, GE Capital Financial was bailed out with $139bn in federal loan guarantees when its losses nearly caused the parent company to collapse.
GE Aerospace CEO Larry Culp led the restructuring effort that included relentless cost-cutting, sale of inefficient businesses, slashing the company's mountain of debt, and imposing so-called lean manufacturing to drive structural productivity gains.
Lean manufacturing is described as a production method that cuts waste, creates customer value, and seeks continuous improvement. Anything that doesn’t add value that customers are willing to pay for is waste, according to this business concept.
In early 2023, GE spun-off its health care business, now trading as GE HealthCare on Nasdaq.
GE Aerospace's main focus is aviation propulsion systems, mainly commercial and defence with some marine. GE HealthCare has been licensing use of the GE brand from GE and will now do so from GE Aerospace, as will GE Vernova.
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