GE earnings drop masks vigorous performance

GENERAL ELECTRIC, the largest US industrial group by market capitalisation, reported a 6 per cent fall in net earnings for the first quarter of the year but robust operating performance, with rising underlying earnings in both its industrial and financial businesses.

Excluding disposal proceeds, earnings per share rose 17 per cent. Chief executive Jeff Immelt reiterated the guidance that the company was on course for double-digit growth for 2012 as a whole.

The results were stronger than analysts’ expectations. And the shares rose 1.8 per cent to $19.48 by mid-morning. Over the past 12 months, the shares have fallen by 4.6 per cent, while the SP 500 index has risen 4.2 per cent.

Earnings from continuing operations were $3.29 billion, down from $3.49 billion in the equivalent period of 2011, on revenues up 7 per cent at $23.5 billion.

Pretax profits from continuing operations were down 47 per cent at $3.93 billion. But that fall was offset by a steep fall in the tax charge, from $3.94 billion to $637 million.

Operating earnings, the measure favoured by GE, were up 1 per cent at $3.59 billion. Operating earnings per share, helped by the company’s buyback programme, were up 3 per cent at 34 US cents, slightly better than analysts’ mean forecast of 33 cents.

Disposals, including the reduction in GE’s stake in NBC Universal from 80 per cent to 49 per cent, and the sale of GE’s 18.6 per cent stake in Garanti Bankasi, a Turkish bank, contributed the equivalent of $0.07 per share to earnings in the comparative period of 2011.

Revenues from GE’s industrial businesses, including aero engines, medical equipment and gas and wind turbines for power generation, rose an underlying 11 per cent to $22.5 billion, excluding the effects of acquisitions, disposals and currency movements. Profits from the industrial businesses were up 10 per cent at $3.27 billion.

Profits at GE Capital, the finance arm, were flat at $1.79 billion, but up 27 per cent excluding the effect of the Garanti sale.

Mr Immelt said the results “demonstrate that . . . GE Capital continues to grow stronger”. – (Copyright The Financial Times Limited 2012)