GE records $877 million goodwill impairment tied to additive manufacturing
Impairment reflects weaker outlook for GE Additive amid COVID-19 downturn
GE reported non-cash, pre-tax goodwill impairment charges of $877 million related to its additive manufacturing business in the second quarter of 2020. The charge, recorded within the company’s aviation segment, reduced continuing earnings per share under GAAP by $0.18 when combined with an additional $839 million goodwill impairment at GECAS, the company’s aircraft leasing unit. GE Additive sits within the aviation portfolio following GE’s 2016 acquisitions of metal 3D-printing suppliers Arcam and Concept Laser for a combined $1.4 billion.
In materials accompanying the results, the company states that the impairment reflects a reassessment of future cash flows for the additive unit amid weaker demand. A GE spokesperson later added that a slowdown in the metal additive machine market during 2019, compounded by the pandemic’s impact on end-market spending, weighed on the outlook while the company continues to view additive as a strategic technology.
The impairment follows broad pressure across the aerospace industry during the first half of 2020, as border restrictions and reduced air travel curtailed airline spending. In the United Kingdom, GE disclosed 769 job reductions across several plants. Unite the Union criticized the government’s industrial response while noting that the affected businesses were not failing prior to the pandemic, according to Rhys McCarthy, a national officer at the union.
“We had a very challenging second quarter that we met head-on, executing well operationally while we took actions to further de-risk our company,” said H. Lawrence Culp, Jr., Chair and Chief Executive Officer at GE. Culp said industrial free cash flow outperformed internal expectations as the company pursued targeted cost-reduction and cash-conservation measures.
The company continues to invest in its additive portfolio, including new hardware and two manufacturing campuses in Germany and Sweden, while aligning spending with customer demand patterns across aviation, medical, and industrial end markets.
