GE Posts Jump in Net Income
General Electric Co. said Friday that first-quarter profit rose 25% from a year earlier, powered by recently acquired healthcare and entertainment businesses, growing global sales and renewed strength across most of its businesses.
Net income grew to $4.04 billion, or 38 cents a share, for the three months ended March 31 from $3.24 billion, or 32 cents, a year earlier. Revenue increased 19% to $39.8 billion.
The Fairfield, Conn.-based industrial, financial and media powerhouse said nine of its 11 businesses delivered at least double-digit earnings growth.
“We’re seeing broad-based strength for the company,” Chief Executive Jeffrey Immelt told analysts during a conference call. “We think we have really strong momentum for the rest of this year and into the future.”
Analysts surveyed by Thomson First Call were looking for GE to report earnings of 37 cents a share on sales of $38.02 billion in the latest quarter.
The company had a gain of about $86 million by reducing its stake in an insurance business.
Looking ahead, GE expects full-year earnings of $1.78 to $1.83 a share, the high end of its target range. Analysts are predicting profit of $1.81 a share, on average.
GE’s global revenue increased 33% as the company continued to step up its sales in China, the Middle East and Eastern Europe with water projects, power turbines and financial products such as credit cards and commercial loans.
After sluggish earnings in recent years, GE has embarked on a strategy of returning to double-digit profit growth by shedding less-profitable businesses such as insurance and making major acquisitions in healthcare, entertainment and other growth areas such as water and security.
The new businesses, which include British medical products firm Amersham and the NBC merger with Universal, helped fuel the latest earnings growth.
Profit jumped 80% to $709 million at NBC Universal on strong sales from movies such as “Meet the Fockers” and “Ray.” Healthcare profit increased 21% on strong demand for medical imaging products.
“They just put a good portfolio of businesses together and they are performing very well,” said Lawrence J. Horan, research director at Parker/Hunter Inc. in Pittsburgh.
The acquisition of Universal was timely because it came amid concerns about the loss of ratings at NBC because of the end of popular programs such as “Friends,” Horan said.
A few analysts expressed concerns that margins in the healthcare business were lower than expected. GE said margins were affected by a charge, but should expand with new high-margin products this year.
Industrial sales increased 25% to $20.8 billion, reflecting the effect of acquisitions and solid growth of existing businesses. Financial services revenue rose 13% over last year to $19.1 billion.
The energy and insurance segments were the only businesses to show a drop in profit. GE said it expected energy to return to profit growth this year as orders picked up after more than two years of declines.
General Electric shares rose 25 cents to $35.75 on the New York Stock Exchange.
