By Lewis Krauskopf
(Reuters) - Even as the drop in oil prices hits its customer base, General Electric Co plans to "play offence" and separate itself from rivals offering oil equipment and services, its chief financial officer said on Friday.
The steep drop in oil prices has raised questions about the prospects for GE's oil business, which contributed 17 percent of the conglomerate's industrial revenue in 2014.
GE has forecast as much as a 5 percent decline in the unit's revenue and profit this year. Its shares have been pressured by the oil price drop, although they rose 1.9 percent on Friday after GE posted a slightly better-than-expected fourth-quarter profit and kept its 2015 financial targets despite oil's slide.
Chief Financial Officer Jeff Bornstein said that while GE was bracing for slowing oil business demand, "This is going to create a lot of opportunities for us to distinguish ourselves."
That includes efforts to win business, scoop up talented workers, invest in technology for future gains, or lower costs by standardizing products.
"We're expecting that there is going to be customer pullback," Bornstein said in an interview. "I think you'd completely have your head in the sand if you didn't think that was going to happen. Having said that, we're going to play offence ... like crazy in 2015."
GE is aggressively seeking to cut costs at the oil and gas unit, including potentially through driving lower prices from suppliers, consolidating manufacturing sites and cutting jobs, Bornstein said.
"To offer the most competitive price point, you've got to have the most competitive cost point," he said.
GE, which has spent $14 billion on deals to build its oil business since 2007, is open to further acquisition opportunities, he said.
"If we saw something that we thought was really financially compelling and really strategically compelling, we would take a look at it," Bornstein said. "A lot of these companies are worth 30 or 40 percent less than they were five months ago."
Sales at GE's oil unit fell 6 percent in the fourth quarter, while orders dropped 10 percent. Bornstein said that much of that performance stemmed from comparisons to the unit's strong results a year earlier and the negative impacts of foreign currency fluctuations. Low oil prices had a "very modest impact" in the quarter, Bornstein said.
"I don't think we've yet seen the behavioural impact by the customer base," Bornstein said.