GE's Home Appliances
After more than 100 years of dominating American kitchens, General Electrics (GE) is trying to sell its iconic home appliance unit. The fact that two Korean companies are cited as prospective buyers is getting a lot of attention.
According to overseas media outlets including the Wall Street Journal (WSJ) on July 16 (local time), GE is planning to discuss the disposal of its home appliance business in a board meeting scheduled to be held in the fourth week of July.
The home appliance unit is in charge of producing refrigerators, air conditioners, and washing machines, and it maintains the third spot in the US market, after Whirlpool and Sweden-based Electrolux. In 2008, GE also made an attempt to sell the division, but canceled its plan in the end.
GE's endeavor can be interpreted to reflect the willingness of GE's CEO Jeff Immelt to get rid of non-essential businesses. The company's home appliance unit is still operated at a profit, but the bank loan-deposit margin and labor costs are higher than other businesses like aviation and gas turbine businesses. The US firm bought Alstom's energy unit for an estimated US$17 billion in June to strengthen its energy business.
GE's home appliance division, located in Louisville, Kentucky, posted an operating profit of US$381 million in 2013, which represents just over 2 percent of the company's total operating profits. The unit recorded US$8.3 billion in sales, which comprises less than 6 percent of the total.
The WSJ reported that China's Haier, Mexican-based Mabe, Korea's LG Household & HealthCare, and Samsung Electronics were named as potential candidates for the acquisition. Haier already turned over US$29.5 billion in the U.S. last year, and Mabe has been producing household appliances since 1987.