October 20, 2021

G.E. Profit Exceeds Forecast

General Electric reported profits and sales on Friday that slightly surpassed Wall Street’s expectations, suggesting that its streamlining strategy in the aftermath of the financial crisis continues on track.

The solid second-quarter results from G.E., the nation’s largest industrial company, whose products range from oilfield equipment to medical imaging machines, add further evidence of an improving outlook for major industrial companies.

Yet the strongest growth for G.E., as for other industrial companies, came in international markets, where revenue rose 23 percent in the quarter. Sales outside the United States account for 59 percent of G.E.’s industrial business.

The company’s giant financing arm, GE Capital, reported operating profits that more than doubled from the same quarter a year earlier. The finance unit, whose loans include consumer credit and commercial real estate, has been aggressively shedding bad debt since the financial crisis hit in the fall of 2008.

Some problem loans remain, mainly in commercial real estate. But GE Capital’s performance has improved steadily in recent quarters.

“There has been good growth in several of the industrial businesses, and GE Capital continues to recover,” said Richard Tortoriello, an analyst at Standard Poor’s.

The company’s net income for the second quarter rose 20 percent to $3.8 billion, up from $3.1 billion in the year-earlier quarter. G.E. reported earnings per share of 34 cents a share, a 17 percent gain from the previous year, when it reported earnings of 29 cents a share.

The average estimate of Wall Street analysts, as compiled by Thomson Reuters, was 32 cents a share.

G.E. reported revenue of $35.6 billion, down 4 percent from the year-earlier quarter, when it reported $36.9 billion revenue. The falloff was a byproduct of the company’s steps to narrow its focus, as it sold a majority stake in NBC Universal, the television network and movie studio, to Comcast. Excluding that from the year-to-year comparison, G.E.’s revenue would have increased 7 percent in this year’s second quarter.

The company’s revenue for the quarter was nearly $1 billion ahead of analysts’ consensus estimate of $34.7 billion.

G.E. reported its results before Wall Street opened on Friday. In a statement, Jeffrey R. Immelt, the chief executive, cited the company’s fifth straight quarter of double-digit profit growth and its ability to “execute in a volatile environment.”

Despite the costly repair of its finance arm, G.E. has continued to invest aggressively to expand some of its industrial divisions.

In the past nine months, for example, the company has spent more than $7 million on three acquisitions to bolster its oil-and-gas equipment business — Dresser, the John Wood Group and Wellstream Holdings. The companies make specialized equipment for oilfield and offshore production, widening G.E.’s range of offerings in that $10 billion-a-year unit.

G.E. is also increasing its investment in research and development, which is up 40 percent from a year ago, as it bets on innovations in future products and services, to fuel longer-term growth.

Article source: http://feeds.nytimes.com/click.phdo?i=fce461f1923e6070c060d6976288e673

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