July 4, 2020

G.E. Profit Is Lifted by Jet Engines and Energy Equipment

G.E. notched strong earnings growth at units that make jet engines and equipment used in oil and gas production. Jeffrey R. Immelt, the chief executive, has worked to expand its presence in the energy industry in recent years.

The order backlog, watched by investors as an important indicator of future sales growth, hit a record high $210 billion in the fourth quarter, up from $203 billion in the third quarter.

“The backlog was a really good number. I didn’t expect to see a $7 billion, 3.5 percent rise in the backlog,” said Jack De Gan, chief investment officer at the Harbor Advisory Corporation, which holds G.E. shares. “Orders in the fourth quarter must have been really good for the industrial side.”

Orders rose 2 percent and would have been up 7 percent without a sharp drop in demand for wind turbines tied to the expected expiration of a tax credit.

Solid demand in China and other oil-producing countries helped offset unsteady economies at home and in Europe, Mr. Immelt said.

“We saw real strength in the emerging markets, and the developed regions stabilized,” Mr. Immelt told investors on a conference call.

The company, which is one of the world’s biggest makers of jet engines and electric turbines, said fourth-quarter earnings rose to $4.01 billion, or 38 cents a share, compared with $3.73 billion, or 35 cents a share, in the period a year earlier.

Factoring out one-time items, profit was 44 cents a share, a penny ahead of analysts’ estimates, according to Thomson Reuters.

Revenue rose 3.6 percent, to $39.33 billion from $37.97 billion a year earlier. Analysts had expected revenue of $38.76 billion.

Profit increased across all divisions, with the jet engine unit notching 22 percent growth, and GE Oil and Gas, which makes equipment used in energy production, up 14 percent.

Profit at the GE Capital finance arm, which is being scaled back, rose 6 percent.

“They saw some good organic growth in the industrial part of their business. GE Capital was a strong contributor,” said Oliver Pursche, president of Gary Goldberg Financial Services, a G.E. shareholder.

Over the last few years, G.E. has bolstered its position in the energy industry.

It has broadened its lineup of equipment used in oil and gas production and mining, with an eye toward capitalizing on surging natural gas production in the United States. G.E. also makes medical equipment and railroad locomotives.

At the same time, Mr. Immelt has concentrated on cutting costs across the company to try to raise operating profit to 15.8 percent of sales by the end of 2013.

Shares of G.E., which is based in Fairfield, Conn., rose 74 cents, or 3.5 percent, to $22.04.

Article source: http://www.nytimes.com/2013/01/19/business/ge-profit-is-lifted-by-jet-engines-and-energy-equipment.html?partner=rss&emc=rss