By Ted Mann

General Electric Co. plans to raise $4 billion by selling two of its smallest industrial units and promised to cut another $1 billion in expenses, as the conglomerate tries to boost its profit margins by shrinking its operations.

In a presentation Wednesday for financial analysts, GE said it plans to sell its Industrial Solutions business, which supplies equipment to the electrical-distribution and grid industries, as well as its GE Water business. The two units combined account for $5 billion in annual revenue.

Chief Executive Jeff Immelt said the company is still on track to hit a key investor target: earnings of$2 per share in 2018. To get there, the company will add new sources of revenue, including through a proposed tie-up of its oil and gas business with Baker Hughes Inc., and cut back on costs.

For next year, Mr. Immelt predicted the company would generate operating profits of about $19 billion and around $135 billion in revenue, with organic revenue growth of between 3% and 5%.

The announcement continues a trend of the past three years, as Mr. Immelt has pared back businesses in the sprawling conglomerate, betting that GE can grow faster by focusing more narrowly on heavy industrial equipment and building a service business rooted in software and the digital world. Mr. Immelt has sold off the bulk of the company's GE Capital financial services arm, signing deals to sell $195 billion worth of businesses.

"We've made the company simpler," he said Wednesday in New York. "We've made the company deeper."

Separately, United Technologies Corp. told investors Wednesday that it expected sluggish growth and manufacturing costs to weigh on profits in its business lines, which include Pratt & Whitney jet engines, Otis elevators and Carrier furnaces and air conditioners.

"I'd like to say we're going to return to normalized growth, but slow growth is the new normal," Chief Executive Gregory Hayes said.

GE's Mr. Immelt also said he is overhauling the way GE makes its industrial products, expanding use of 3-D printing to manufacture parts in its jet engine business, and snapping up software startups as it tries to build its GE Digital business.

Looking back at previous GE efforts like adopting Six Sigma, a management improvement system made famous by former GE CEO Jack Welch, Mr. Immelt said: "If you put yourself in my shoes additive manufacturing makes a s---load more sense than Six Sigma did. I was there the first day we did Six Sigma; it made no sense to me."

Mr. Immelt offered a defense of globalization -- a subject he has addressed regularly over the past year, as politicians like President-elect Donald Trump have lashed out at GE's corporate and industrial peers for shifting U.S. jobs across borders in search of labor savings.

GE has grown its foreign businesses twice as much as its domestic business over the last 15 years, Mr. Immelt told investors, while selling 85% of its jet engines and gas-fired power turbines overseas.

"We've done all that with an antiquated tax plan, no Ex-Im Bank, and more or less on our own over the last 15 years," Mr. Immelt said, referring to the U.S. Export-Import Bank. "If we got tax reform, if we got an Ex-Im Bank, those things are good for you and me."

In the short run, Mr. Immelt said, GE will be seeking ways to cut costs by shrinking its footprint and closing some facilities -- the very corporate actions that have triggered political backlash from Mr. Trump and others.

GE is seeking $100 million a year in new cost-cuts from "rationalizing" its facilities, he said. After a spate of acquisitions, including that of Alstom SA's power business as well as Baker Hughes Inc., GE now has 150 million square feet of factory space world-wide, which Mr. Immelt suggested was ample room to seek new cuts.

Write to Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

December 15, 2016 02:47 ET (07:47 GMT)

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