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GE earnings rise 8.3%, match estimates

Source : BUSINESS_STANDARD
Last Updated: Fri, Oct 19, 2012 19:41 hrs

General Electric Co posted an 8.3 per cent rise in quarterly profit, as solid demand in the United States and Asia for its electric turbines and railroad locomotives helped to offset the effects of Europe's woes.

GE, The largest US conglomerate, said on Friday that third-quarter net income increased to $3.49 billion, or 33 cents per share, from $3.22 billion, or 22 cents per share, a year earlier.

Factoring out one-time items, the profit was 36 cents per share, meeting the analysts' average estimate, according to Thomson Reuters I/B/E/S. Revenue rose 2.8 per cent to $36.35 billion from $35.36 billion. Wall Street expected $36.94 billion.

"The global economy is uncertain, and we are prepared for a variety of economic outcomes," said Chief Executive Jeff Immelt, who confirmed the company's target to increase earnings at a double-digit percentage rate in 2012. GE shares dropped 2.3 per cent to $22.29 in premarket trading.

The company experienced its sharpest revenue growth in its energy infrastructure arm, where sales were up 12 per cent. Immelt had bulked up that business in 2010 and 2011 with an $11 billion wave of acquisitions, largely in the oil and gas sector.

Sales at GE's aviation and healthcare arms fell 1 per cent.

Most major industrials have experienced weak demand in Europe for their equipment as a result of the continent's debt crisis and GE has been no exception to that trend, though Immelt told investors late last month that European demand has been no worse than the company had expected.

The Fairfield, Connecticut-based company laid out plans last month to cut its selling, general and administrative costs by $700 million to $1 billion next year in the face of an uncertain global economic environment.

Immelt has also committed the company to buy back enough shares to lower its share count below 10 billion — its level in 2008. That year GE sold new shares to raise cash during the financial crisis.

As of Thursday's close, GE stock has climbed some 41 per cent over the past year, reaching levels not seen since the 2008 crisis and sharply outpacing the 22 per cent rise of the Dow Jones industrial average.




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