GE Profit Rises 4% in Quarter
General Electric Co., the industrial, financial services and media conglomerate, said Friday that its second-quarter profit rose 4% as strong growth in most of its businesses offset weakness at its NBC television network.
The results were in line with expectations, but its shares slumped to a new 52-week low as analysts hoping for an increase in earnings guidance were disappointed.
As one of the world’s largest companies, GE’s earnings are considered a bellwether for the performance of many other companies as earnings reporting season kicks into gear.
“Our economy and the markets for our products remain very strong,” GE Chairman and Chief Executive Jeffrey Immelt said during a conference call with analysts.
The Fairfield, Conn.-based company earned $4.85 billion, or 47 cents a share, in the three months ended June 30 compared with $4.65 billion, or 44 cents, a year earlier.
The results matched the consensus estimate of 47 cents a share by analysts surveyed by Thomson Financial.
Total revenue climbed 9% to $39.9 billion and revenue grew 18% in emerging markets, GE executives said.
Total orders rose 17%.
“Our solid quarterly results were highlighted by strong top- and bottom-line growth at commercial finance, demand for our products and services at infrastructure and strong profitability at healthcare, consumer finance and industrial,” Immelt said.
GE shares fell as low as $32.06 on Friday, before closing at $32.11, down 56 cents, or 1.7%. The stock had traded from $32.21 to $36.34 over the last year.
“We didn’t see any real positive surprises in the quarter,” said Robert Schenosky, an industrial analyst with Jefferies & Co. “NBC continues to be a drag.”
NBC Universal’s profit fell 10% to $882 million. The network has struggled with the loss of popular shows such as “Friends” in recent years, but GE executives expressed confidence about its plans for new shows and said other aspects of the business were doing well.
“We are committed to this business and we are making progress,” GE Chief Financial Officer Keith Sherin said.
Matt Collins, an industrial analyst at Edward Jones in St. Louis, called the earnings “solid but not stellar.”
“In this market environment, it takes a positive surprise to get investors excited,” Collins said.
Earnings at the commercial finance business jumped 21% to $1.05 billion and 20% to $880 million at consumer finance. GE’s healthcare business had profit of $795 million, up 18% from a year earlier; the industrial business had profit of $729 million, up 15%; and infrastructure had profit of $2.1 billion, up 10%.
Revenue at GE’s wind power business jumped 69% to $721 million as 427 units were sold in the latest quarter, an increase of 106 from a year earlier. Revenue from commercial aircraft engines rose 30%.
GE reaffirmed that it expected earnings per share of $1.94 to $2.02 this year, up 13% to 17%. Analysts expect earnings of $1.99 a share.
Some analysts have been looking for GE to boost its forecast toward the higher end of the range, but Immelt said he wanted to see how its turnaround plan for NBC worked and whether prices would improve for its plastics business.
