FILE PHOTO - The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017. REUTERS/Daniel Becerril

(Reuters) - Fitch Ratings on Tuesday downgraded General Electric Co GE.N and its finance arm, GE Capital, citing deterioration in the industrial conglomerate's operating and financial performance.

The credit rating agency lowered the long-term issuer default ratings for GE and GE Capital to “A+” from “AA-” and their short-term issuer default ratings to “F1” from “F1+”, with a negative outlook.

Fitch said a slower return to both higher margins and stronger free cash flow than previously anticipated prompted the downgrade.

GE’s performance was being affected by “secular” changes in its power segment’s gas turbine business that has reduced long-term prospects for growth, it added.

The company is aiming to reduce overhead costs by $2 billion next year, with half of that coming from its troubled power unit, which sells electrical generation equipment.

The power unit has struggled due to weak demand and excess inventory in the market.

Fitch said GE has identified several actions that should improve its operating performance, but the implementation could occur over an extended period and there could be numerous execution risks.

“Cash flow available to the industrial business will be reduced through at least 2018 by the suspension of dividends from GE Capital while it reviews its insurance reserves,” the agency said in a statement.

Earlier this month, Moody’s downgraded General Electric one notch to “A2” from “A1” due to what it called “severe deterioration” in the financial performance of GE’s power segment expected to last through at least 2019.