GE’s Profit Climbs 47% in Fourth Quarter
General Electric Co. said Friday that its fourth-quarter earnings rose 47%, helped by insurance and industrial businesses such as plastics and jet engines.
Net income rose to $4.56 billion, or 45 cents a share, from $3.1 billion, or 31 cents, a year earlier. Sales rose 4.1% to $37 billion, the Fairfield, Conn.-based company said.
Chief Executive Jeffrey Immelt has sought bigger returns in the medical and consumer-finance units through acquisitions and divestitures and is being helped by economic growth.
Orders across the company rose 19% last quarter, indicating “strong momentum,” Immelt said, predicting businesses like locomotives and jet engines will have their best gains this year since 2000.
“You got an as-expected quarter, which in and of itself is an accomplishment given 2002 and 2003 was full of surprises and reductions in earnings forecasts from GE,” said Michael Holton, an analyst at T. Rowe Price & Associates.
Sales exceeded estimates of $36.3 billion, the average forecast of analysts surveyed by Thomson First Call. The gains in the quarter were led by the company’s specialty-chemicals, locomotive, consumer-finance and medical-equipment businesses.
Shares of General Electric closed at their highest level since May 2002, rising $1.35, or 4.2%, to $33.35 on the New York Stock Exchange.
Excluding the charges in the year-earlier fourth quarter for reinsurance reserves and other costs, General Electric said profit in the most recent period still rose 11%. Profit excluding special items had declined in the four previous quarters.
The net income percentage increase was the largest quarterly rise in nine years.
Since taking office in September 2001, Immelt has exited businesses with lower returns, such as insurance, and added to those with higher growth rates, such as media and health care, in an effort to return to the profit growth of 10% or more that the company had been used to before the slide began in 2001.
General Electric is the world’s biggest maker of jet engines, turbines for power plants, medical imaging equipment and locomotives.
Other businesses include the NBC television network, consumer and commercial finance, plastics and appliances.
General Electric is spending $5.5 billion on Vivendi Universal’s U.S. media assets, including film and television studios and cable channels, and about $12 billion more on medical companies Amersham and Instrumentarium.
Immelt, who reorganized the company into 11 operating units this year, said nine of them would have profit increases of at least 10%.
He reiterated a forecast for profit to increase in 2005 by at least 10%. Earnings in 2004 will be $1.50 to $1.60 a share, including costs related to divestitures and acquisitions.
