General Electric Posts 18% Profit Gain
General Electric Co.’s profit jumped 18% in the fourth quarter as acquisitions and a strong global economy ushered in a return to double-digit earnings growth at the nation’s largest company.
The Fairfield, Conn.-based industrial, financial and media conglomerate said Friday that it earned $5.37 billion, or 51 cents a share, in the October-to-December period, up from $4.56 billion, or 45 cents, a year earlier.
The results beat the consensus estimate of 50 cents a share of analysts surveyed by Thomson First Call.
“The breadth and the depth of the momentum we see is very positive,” said Jeff Immelt, GE’s chief executive. “We think we’re in a period of expanding returns and have lots of cash flexibility.”
Revenue in the fourth quarter was $43.7 billion, up 18% from $37 billion in the same period a year earlier.
GE shares fell 24 cents to $35.13 on the New York Stock Exchange.
GE reaffirmed its forecast that profit would grow 12% to 17% this year and per-share earnings would grow 10% to 15%. That growth should be sustained into 2006, Immelt said.
“GE had a tremendous fourth quarter and an excellent 2004 as we completed our strategic repositioning and returned to double-digit earnings growth in the quarter,” Immelt said. “We are benefiting from strong execution of our growth initiatives and an excellent global economy.”
Profit jumped 60% at GE’s NBC television network, which includes the recently acquired Universal television and entertainment businesses. Hit movies such as “Meet the Fockers” and “Ray” helped fuel the growth.
Immelt downplayed the prospects of further acquisitions by NBC, but GE executives have said the company has the ability to do $3 billion to $5 billion in industrial acquisitions annually.
GE often produced double-digit profit growth in the 1990s, but earnings have been sluggish the last three years as major businesses such as gas turbines for power plants have slowed.
GE embarked on a growth strategy with acquisitions that played a key role in boosting sales in the latest quarter. Industrial sales grew 19% in the fourth quarter, and total orders increased 15% over the last year, Immelt said.
For the first time in several years, GE’s energy and transportation businesses are expected to expand simultaneously, Immelt said. The transportation segment, which includes aircraft engines, was hurt by the Sept. 11, 2001, terrorist attacks. The energy business is recovering from a long downturn in power plant turbines.
For the year, GE reported earnings of $16.6 billion, or $1.59 a share, on revenue of $152.4 billion. That compared with earnings of $15 billion, or $1.49, on revenue of $134.1 billion in 2003.
