General Electric reported earnings on Friday that slightly exceeded Wall Street’s expectations, while the company’s big industrial business showed evidence of solid growth. þþþG.E., the nation’s largest industrial company, said that revenue in the industrial side of its business grew by 14 percent. þþThe revenue for the company as a whole fell 8 percent from the year-ago quarter, to $35.2 billion. þþThis year’s first quarter had no contribution from NBC Universal, which G.E. owned but sold a majority stake to Comcast. Excluding the revenue from NBC Universal in the year ago quarter, revenue increased by 4 percent and exceeded the average analysts’ estimate of $34.8 billion, as complied by FactSet Research. þþThe quarterly report points to a company steadily returning to its industrial roots and paring its dependence on finance. When the financial crisis hit, G.E.’s big finance arm battered the company, forcing it to cut its dividend in 2009 for the first time since the Great Depression. þþYet, since then, General Electric’s earnings growth has come mainly from the finance business, GE Capital, which is recovering from its steep losses. But the industrial products, like jet engines and power generators, are beginning to take over. þþ“We’re starting to see a handoff of sorts, with the industrial side moving to take over from finance as a source of profit growth,” said Richard Tortoriello, an analyst at S&P Capital IQ. þþG.E.’s overall profit and revenue, analysts say, are a byproduct of the strategic transition in the company’s portfolio of businesses. þþIn a statement, Jeffrey R. Immelt, the chief executive, said, “Today’s results demonstrate that we are achieving industrial growth and GE Capital continues to grow stronger.” þþThe company’s net profit fell 12 percent $3.0 billion, compared with $3.4 billion in the year-ago quarter. þþOperating earnings for the quarter, which excludes one-time charges for business sold at a loss and gains from asset sales, increased 1 percent, to $3.6 billion, or 34 cents a share. That was just ahead of Wall Street’s forecast of 33 cents a share. þþRevenue, at $35.2 billion, though down from the previous year, was more than $400 million higher than analysts’ estimates. þþThere are weak spots in the company’s broad collection of equipment businesses. Financial turmoil in Europe continues to drag down sales of some industrial products, like medical imaging equipment. The wind turbine unit is suffering from aggressive government-subsidized competitors, especially in China, industrywide excess capacity and price-cutting. þþBut the global industrial recovery, analysts say, is progressing in key markets like aviation, power generation, and oil and gas production equipment. þþGE Capital has largely returned to health, though it is a shrunken business. Its revenues were down 12 percent from the year-earlier quarter. þþGeneral Electric has increased its dividend four times since the payout was cut to conserve cash in 2009. Yet the quarterly dividend is still only 55 percent of the level before the financial crisis. þþThe finance business is now regulated like a bank, by the Federal Reserve. For several months, the Fed has been reviewing the finance unit’s books to determine whether it is healthy enough to resume its previous practice of paying a hefty share of its earnings to the parent company. þþG.E.’s management has said it expects the Fed approval sometime this year, which could give the company funds to lift its dividend further. þ
Source: NY Times
