Here’s How GE Is Winning

With better-than-anticipated earnings and a significant increase in its equipment orders backlog, General Electric’s (NYSE:GE) fourth-quarter results shows that the work done by Chief Executive Officer Jeff Immelt to increase the company’s presence in the energy industry and scale back its costs has paid off.

GE, the world’s largest conglomerate, reported Friday that earnings rose to $4.01 billion, or 38 cents per share, for the three months ended in December, an increase from $3.73 billion, or 35 cents per share, in the year-ago quarter. Excluding one-time items, the company made a profit of 44 cents per share, a penny more than analysts polled by Thomson Reuters had predicted. Revenue also beat expectations, coming in at $39.33 billion, an increase of 3.6 percent from last year’s $37.97 billion. Analysts had estimated revenue of $38.76 billion.

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“We ended the year with a strong quarter despite the mixed global economic environment,” said Immelt in the earnings release. “The outlook for developed markets remains uncertain, but we are seeing growth in China and the resource rich countries.”

While profit increased across all of GE’s divisions, growth was particularly strong at its jet engine unit, which posted a 22 percent increase, and GE Oil and Gas, which was up 14 percent. Additionally, profit at GE Capital, a unit at which the company has been cutting back, increased 6 percent…

In the past several years, as Reuters reported, General Electric has turned its focus to and expended its business toward the energy industry to take advantage of the boom in natural gas production in the United States. Simultaneously, Immelt has made efforts to lower expenses in order for the company’s operating profit to reach 15.8 percent of sales by the end of this year.

As proof that Immelt’s growth strategy is working, the orders backlog, a key indicator of future sales growth revealed in the earnings report, rose 3.5 percent, hitting $210 billion in the fourth quarter.

“The backlog was a really good number,” Harbor Advisory chief investment officer Jack De Gan told Reuters. “Orders in the fourth quarter must have been really good for the industrial side.”

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