General Electric revenues for Q2 beat analysts’ estimates
Profit from continuing operations climbed 18% to $3.73 billion (€2.59bn), or 34 cents a share, from $3.15bn or 29 cents, excluding pension costs, Fairfield, Connecticut-based GE said. That exceeded the 33 cent average of 13 analysts’ estimates compiled by Bloomberg.
Chief executive, Jeffrey Immelt has said losses have peaked at GE Capital, and the unit is writing more profitable loans. The gains helped offset narrower profit margins at GE Energy. The company’s total backlog, a measure of future industrial growth, rose 6.8% to a record $189bn.
“Investors want to see the industrial side, the higher multiple side of GE’s business, come back and on a sustainable basis returned to the dominant portion of the company,” Nicholas Heymann, a New York-based analyst with William Blair & Co, said in a Bloomberg Television interview. “The fact that orders were up gives people encouragement.”
Equipment orders gained 33% as GE introduces more efficient wind and gas turbines, and service orders climbed 16%. Infrastructure orders increased 24%.
Revenue of $35.6bn topped analysts’ estimates of $34.7bn after a majority of the NBC Universal media division was sold in January.
Including a pension cost of $181m, profit attributable to the company was $3.76bn, or 33 cents a share. This was the second quarter in which GE broke out per- share pension costs or benefits.
“We’re going to see solid double -digit operating earnings growth for the year, and we’re confident in our total-year framework for both earnings and cash-flow from operations,” Immelt said on an earnings conference call. “We see momentum building for 2012.”
GE doesn’t provide specific earnings and sales forecasts, providing instead a framework that analysts and investors can use to calculate their own estimates. Industrial earnings and sales should increase in the second half of 2011 and accelerate into 2012, Immelt said in the statement.
GE Capital profit from continuing operations more than doubled to $1.66bn on revenue that was little changed at $12.4bn, GE said.
Immelt is working to boost the share of profit from industrial operations and shrink the percentage contribution from the finance division.
Profit in the energy infrastructure segment slid 19% to $1.55bn amid lower prices for wind and gas turbines.
GE said it’s on track to generate between $12bn and $13bn in cash from industrial operating activities this year. In the first half, it posted $4.4bn, a 31% decline from a year earlier.
Profit at the energy and healthcare units fell short of estimates from Brookfield Investments, while the aviation unit performed better than projections, Joel Levington, managing director at Brookfield Investment Management Inc, said in an e-mail.
“I’d expect a muted to modestly positive reaction on the credit side,” he said.
Sales from markets outside the US were 59% of the total in the quarter, up from 53% for all of last year. Immelt has bolstered exports while adding jobs in the US amid demand from emerging markets including the Middle East.
All 22 large gas turbines built at the world’s biggest such plant, in Greenville, South Carolina, will be exports this year. GE is the world’s biggest provider of power-plant turbines, medical-imaging equipment, locomotives and jet engines. GE last week reorganised management at the Energy Infrastructure segment as it absorbs about $12bn in acquisitions.
GE chief financial officer Keith Sherin said the company sees a pickup in volume for energy equipment, including wind and gas turbines. In the second half of 2011, volume may be about 1,400 wind turbines compared with 1,208 in the same period last year.
“There’s a time lag to the pricing that takes place; that always is the way it goes,” Immelt said, referring to turbines. “We’re seeing the early indicators of it turning, but that’s going to take some time.”
Forecasts for record jet-engine production were bolstered this week when Boeing Co chose a GE Aviation partnership as the sole provider for an upgrade of its best-selling 737 jet.
David Joyce, GE Aviation’s chief, told investors last month that research and development will rise this year to about $1.4bn from $1bn in 2010.
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