GE’s annual report is even shorter. Things change.
is the last Annual Report is further proof that the company is shaking itself. The document continues to get shorter as GE becomes a normal industrial conglomerate.
Report length might seem like a weird way to judge change in a company, but in recent years GE (ticker: GE) has been famous for its complexity. The company makes a mix of expensive equipment that takes a long time to build and deliver, as well as companies that service all that equipment for a wide range of industries. GE has bought and sold huge companies – deals that generate reams of paper for investors to poring over. And don’t forget that for years the conglomerate also ran what was essentially a huge banking organization for years: GE Capital.
GE’s quarterly results presentation for the fourth quarter of 2017, its slide deck for investors, its press release and its supplementary information were 61 pages long.
(HON) quarterly documents totaled 38 pages.
Enter Larry Culp. The current CEO took over in 2018, saying he wanted to simplify GE’s business. He sold assets, paid off debt and reduced GE Capital so much that it is no longer presented as a separate line of business.
And the push for simplification continues. Culp unveiled plans in November to split the company into three parts: one dedicated to aviation, one to healthcare and another to power generation.
He also cut over 100 pages from the annual report. GE’s 2017 annual report was 322 pages, including all attachments. The report without attachments was 206 pages. The 2021 report excluding required attachments is just 92, according to the company, compared to 112 pages in 2020.
“In the spirit of Kaizen, the lean principle of continuous improvement, we were able to reduce the length of the 10k again, this time by 20 pages compared to the previous year,” said Steve Winoker, vice president of Investor Relations, in a note. to investors on Friday.
There is a risk, of course, that shorter reports mean fewer details. It is always 237pages with attachments and 92 pages without. On a comparable basis, Honeywell’s 2021 annual report is approximately 123 pages with attachments and 206 pages if included.
Annual reports always contain useful information for investors. A key point for GE is that its pension funding has improved in 2021. GE retiree pension obligations are now approximately 84% funded, based on standard accounting practices, compared to 76% in 2020.
Asset returns, added cash and changing interest rates all affect the funding of pension plans. Pension plans that are more than 80% funded, according to common accounting practices, generally don’t drain a company’s cash.
R&D spending was $3.7 billion for 2021, compared to $3.8 billion in 2022. The decline in R&D is a watch item for investors. It is important to invest in products even if it means lower profit margins.
And because GE Capital is no longer presented as a separate segment, insurance operations that generated impairments in previous years are now presented within the business line of the income statement. Details of insurance activities are always included in the notes to the financial statements.
GE stock closed 1.9% lower on Friday amid a broad sell-off in the market. the
fell 1.9%, while
Dow Jones Industrial Average
Next up for GE investors will be March 10, when the company hosts its 2022 outlook event. This meeting will provide analysts and investors with more details on the year ahead.
Write to Al Root at [email protected]