The financial performance is in line with Wall Street’s expectations and reflected the company’s strategy of paring back its reliance on its big finance arm and relying more on its diverse portfolio of industrial businesses.
The quarterly profit was helped by strong orders for jet engines and a favorable tax rate. G.E. executives expressed confidence that despite “volatile” economic conditions, especially in Europe, the company would remain on track for double-digit earnings growth in 2012 and an increase in the dividend payout to shareholders.
G.E. reported that its operating earnings rose 6 percent to $4.1 billion, which excludes the previous year’s contribution from NBC Universal, which G.E. had owned and sold a majority stake to Comcast.
Its operating earnings per share rose 11 percent, to 39 cents a share. The result partly reflects fewer shares outstanding than the year-earlier quarter, because the company bought back shares, and was just above analysts’ average estimate of 38 cents a share, as compiled by Thomson Reuters.
Revenue for the quarter declined 8 percent, to $38 billion. That was in line with Wall Street’s forecast of $40 billion. Excluding revenue in the 2010 fourth quarter from NBC, revenue from continuing operations rose 4 percent.
In a statement, Jeffrey R. Immelt, General Electric’s chief executive, said the quarterly performance underlined the company’s “strength and resilience,” continuing a steady recovery from the financial crisis. In Europe, Mr. Immelt said, the company would be restructuring its operations given the weakness in that market.
But Mr. Immelt said G.E. remained confident that its financial improvement would improve in 2012 enough to “provide dividend growth to our shareholders in line with earnings.”
Revenue in General Electric’s industrial businesses — ranging from jet engines and power generators to medical-imaging equipment and wind mills — rose 10 percent to $26.8 billion. The result was helped by strong sales of jet engines and gas turbines in the Middle East.
The company’s revenue was held back by a 9 percent decline, to $11.6 billion, in its finance unit, GE Capital. That contraction was by design. Before the financial crisis hit in 2008, GE Capital had grown well beyond its traditional business of financing sales of the company’s industrial equipment into home mortgages in Britain and consumer finance in Japan.
But battered by the credit crunch, General Electic was forced to cut its dividend for the first time since the Great Depression, and began the lengthy process of shedding bad loans and trimming the finance business.
A smaller GE Credit produces less revenue for the company, but the recovery of the unit has been the main source of profit gains in the last few years.
“GE Capital is continuing to improve and to drive earnings growth for the company,” said Steven Winoker, an analyst at Sanford C. Bernstein.
Article source: http://www.nytimes.com/2012/01/21/business/general-electric-says-quarterly-profit-rose-6.html?partner=rss&emc=rss
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