Despite the Economy, GE’s Profits Soar
Weakness in the industrial segment is a widely acknowledge fact, but General Electric (NYSE:GE) managed to increase earnings in the first quarter by 16 percent thanks to the sale of its remaining stake in NBCUniversal.
On Friday, GE reported a profit of $3.53 billion, or 34 cents per share, compared with $3.03, or 29 cents, in the year-ago quarter. While revenue remained flat at $35 billion, the conglomerate managed to barely edge past expectations. Analysts polled by Thomson Reuters forecast earnings of 35 cents and $34.51 billion in revenue. Adding to the earnings gain was an 8-cents-per-share contribution from GE’s sale of its portion of the NBCUniversal join venture, which partially was offset by a four-cents-per-share charge related to restructuring.
The company’s operating earnings, which excludes pension costs, rose to 39 cents, up from the 34 cents reported last year. In addition, costs and expenses dropped 0.8 percent…
GE has struggled to improve its profit margins in its industrial business in the past few years, and despite the difficult economic environment, Chief Executive Officer Jeffrey Immelt has focused on reducing the company’s reliance on its financial arm — GE Capital — in order to invest in the grow of its industrial businesses, which investors tend to value more highly. But the company had a setback this quarter. From this segment, which includes energy infrastructure and aviation, GE reported that revenue fell 5.7 percent to $22.67 billion and profit dropped 11 percent to $2.94 billion. The company also ended the quarter with its largest backlog in equipment and services.
Immelt said the company’s markets were “mixed.” The U.S. and growth markets met expectations, but industrial-segment revenue in Europe was worse than predicted. He added that GE had “always anticipated that the first half of 2013 would be our toughest comparison” but it expects power and water segments to improve during the year.
In comparison, revenue from GE Capital rose 1.7 percent to $11.54 billion, while profit jumped 8.7 percent to $1.93 billion.
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