Monday, July 7, 2014

General Electric's Oil & Gas Segment Analysis

The oil and gas services market doesn't always spring to mind when considering General Electric Company , but the company has made a number of strategic investments in the sector. Indeed, oil and gas is a key part of its strategy to realign itself as an industrial company. However, General Electric will have to be careful over its growth plans, because the industry has a number of long-term trends driving it, and companies like Baker Hughes Inc. and Dresser-Rand Group are seeing mixed fortunes in dealing with them.

The importance of oil and gas to General Electric Company
A quick look at 2013 industrial revenue by segment demonstrates that oil and gas is still only its fourth largest industrial profit center.

Source: General Electric Presentations

On the other hand, due to a combination of acquisitions and organic growth, the oil and gas segment has grown profits by 51% over the last five years.