GE Profit Surges 24% in Quarter
General Electric Co. posted a 24% rise in quarterly earnings Friday on a return to profit growth at its energy business and steady gains at its financial units.
The earnings improvement came from nearly every corner of the conglomerate’s business portfolio, with all 11 operating segments posting a profit gain of more than 10%.
Net income rose to $4.65 billion, or 44 cents a share, in the second quarter, from $3.75 billion, or 36 cents, a year earlier. Sales rose 13% to $41.6 billion. Orders increased 13%.
Analysts had expected GE to earn 44 cents a share, before extraordinary items, on revenue of $41.9 billion, according to Reuters Estimates.
Fairfield, Conn.-based GE said it had put in place initiatives to ensure profit growth of more than 10% in 2005 and beyond.
“Our outlook is really very strong and we believe the economy is going to give us all the momentum we need,” Chief Executive Jeffrey R. Immelt said.
For the full year, GE lifted the low end of its earnings-per-share forecast by 2 cents to $1.80. It kept the high end unchanged at $1.83. Analysts are forecasting $1.82 a share for 2005, according to Reuters Estimates.
But for the third quarter, GE forecast earnings per share of 43 cents to 44 cents on revenue of $41 billion to $42 billion, versus analysts’ estimates of 45 cents on sales of $41.8 billion, according to Reuters Estimates.
The near-term caution may have hurt GE shares Friday. They slipped 10 cents to $35.53 and are down 2.7% this year.
The energy business, GE’s largest industrial unit, posted a profit increase in the second quarter after 10 straight quarters of decline starting in 2002, when the business began to reel from a downturn in the wholesale electricity market.
GE Energy’s second-quarter earnings rose 10% to $698 million on sales of $4.54 billion.
Of GE’s other business segments, the commercial and consumer finance businesses continued to be an earnings driver, with a profit gain of more than 20% in the quarter.
Insurance profits rose to $284 million from $53 million, helped by the absence of last year’s loss related to the initial public offering of insurance unit Genworth Financial Inc.
Earnings at NBC Universal rose 27% to $979 million, helped in part by a full quarter of earnings from film company Vivendi Universal Entertainment, which GE bought in May 2004.
GE Healthcare put to rest some concerns about margins with an improvement in profitability, while sales grew 12%.
