G.E., the nation’s largest industrial corporation, reported net income of $3.5 billion, or 34 cents a share, a 16 percent increase from the year-earlier quarter, when earnings were $3 billion, or 29 cents a share.
On an operating basis, income was $4.1 billion, or 39 cents a share. Excluding gains from the sale of its remaining stake in the media company NBCUniversal to Comcast, G.E. posted a 13 percent increase in operating income, to $3.6 billion, or 35 cents a share. That figure matched the average estimate of securities analysts, as compiled by Thomson Reuters.
Revenue in the first quarter was $35 billion, flat compared with figures in the period a year earlier. Over all, G.E.’s revenue came in ahead of Wall Street’s forecast of $34.5 billion. But that total included proceeds from the NBCUniversal sale and slightly higher revenue this year from G.E.’s big finance division, GE Capital.
Revenue from the industrial business, whose products range from jet engines to medical imaging equipment, declined 6 percent, to $22.7 billion. The main shortfall came in its power and water unit, particularly from lower sales of generators for electrical power plants and wind turbines. As investment subsidies are phased out, wind turbine sales have fallen. With the weak economic conditions, especially in Europe, the demand for electrical power is down, meaning fewer power generators sold, upgraded and serviced.
The power and water unit’s revenue fell 26 percent from a year ago, to $4.8 billion, or $1.7 billion less than in the year-ago quarter. Without the power and water unit, G.E.’s industrial business would have grown slightly.
“This is a power and water story,” Keith S. Sherin, G.E.’s chief financial officer, said in a conference call with analysts.
Still, G.E. managed to pull out a steady financial performance, helped by higher profits in its aviation and transportation units and by GE Capital.
But weak industrial demand, analysts say, will be a challenge in the first half of this year for the big companies in the sector including Siemens, Honeywell and United Technologies.
“We’re in a decelerating global environment that will mean slow growth at best,” said Steven Winoker, an analyst for Sanford C. Bernstein Company.
In a morning conference call, Jeffrey R. Immelt, G.E.’s chief executive, called the quarterly performance “mixed.” The first half of 2013, Mr. Immelt said, was expected to be the most challenging, with demand likely to pick up in the second half.
Industrial orders were strong in some businesses, with orders for oil and gas equipment up 24 percent and commercial aviation orders rose 47 percent.
The rising industrial orders, Mr. Immelt said, should “position us well for the second half.”
But Europe, where industrial revenue fell 17 percent, may continue to be a drag on the industrial business. “Europe was tougher than we expected,” Mr. Immelt said, adding later, “We’re not counting on things getting better.”
To maintain profits in spite of the weakness in industrial sales, G.E. plans to cut costs by $1 billion this year. And the company, Mr. Immelt said, remained committed to spending $18 billion during the year on dividend payments and to buy back its own shares.
Article source: http://www.nytimes.com/2013/04/20/business/ge-posts-16-rise-in-quarterly-profit.html?partner=rss&emc=rss