General Electric, the nation’s largest industrial company, cut its dividend on Monday, only the second time it has done so since the Great Depression.
The company announced before the start of stock trading that it would reduce its quarterly payout by half, from to 12 cents a share from 24 cents a share.
The dividend cut is the most emphatic move that John Flannery, G. E.’s new chief executive, has made since he took over in August. It is part of his broader plan to streamline the company by cutting costs and focusing on fewer businesses.
Last month, when G. E. reported disappointing financial results, Mr. Flannery said that the company would sharpen its focus on fewer industrial businesses and shed at least $20 billion in assets over the next two years.
That may just be the start. Mr. Flannery is set to detail his plans for G. E. at a presentation on Monday. Besides Mr. Flannery and the company’s chief financial officer, Jamie Miller, executives from only two of the company’s units — jet engines and electrical power generators — are scheduled to make presentations.
For his part, according to a report by The Wall Street Journal on Monday, Mr. Flannery is expected to outline plans for three main businesses: aviation, power generation and health care.
The other businesses currently in G. E.’s portfolio include railway locomotives, lighting and a majority stake in a major oil-field equipment company, Baker Hughes.
G. E. had nearly 300,000 employees worldwide at the end of last year. Selling off several businesses in the next few years would leave the company much smaller, perhaps two-thirds the size it is today.
Since becoming chief executive, Mr. Flannery has moved swiftly to roll back spending. He grounded the corporate jet fleet, stretched out the construction schedule for G. E.’s new headquarters in Boston, closed down several international research-and-development labs and trimmed the work force in units like GE Digital, the company’s ambitious effort to become an industrial-software powerhouse.
Mr. Flannery had previously announced an acceleration of cost-cutting goals established under his predecessor, Jeffrey R. Immelt, who targeted $1 billion annually this year and next. Mr. Flannery doubled the 2018 goal to $2 billion in expenses to be eliminated.
G. E.’s stock price has fallen by 35 percent this year.
G. E. last cut its dividend in 2009 in the throes of the financial crisis, when it was the nation’s largest non-bank financial institution. That dividend cut was the first since the Great Depression for a company long revered as a model of enlightened management.
The dividend cut announced on Monday reflects the company’s declining cash flow, but it also underscores Mr. Flannery’s decision to further pare back G. E.’s portfolio of businesses. The total dividend payout had been more than $8 billion a year, among the most costly for American corporations. But the cash flow to cover that bill has faltered.
When G. E. reported its third-quarter earnings last month, it said that cash flow for the year would be about $7 billion, down from an initial target of $12 billion to $14 billion.
G. E. executives emphasized that this year’s cash shortfall was attributable to two businesses — the oil-field equipment unit, which showed persistent weakness, and its power-turbine business, which had a surprisingly sharp decline. Both units are expected to improve their performance next year, executives said, lifting G.E.’s cash flow in the process.
Still, Mr. Flannery warned then that 2018 would be “a reset year.”
And given the slimming-down strategy, G. E. will be a smaller company, with fewer businesses to contribute cash in the future.