GE First-Quarter Net Climbs 25% on Equipment Orders
Enviado: 15/4/2005 11:58GE First-Quarter Net Climbs 25% on Equipment Orders (Update1)
April 15 (Bloomberg) -- General Electric Co.'s first-quarter profit rose 25 percent, the most in five quarters, spurred by orders for industrial goods and Chief Executive Jeffrey Immelt's shift into faster-growing areas including health care, water treatment, security and consumer finance.
Net income climbed to $4.04 billion, or 38 cents a share, from $3.24 billion, or 32 cents a year earlier, Fairfield, Connecticut-based GE said in a statement today. Revenue at the world's largest company by market value rose 19 percent to $39.8 billion, bolstered by acquisitions.
Profit rose at least 10 percent at nine of the company's 11 main businesses. Areas where growth slowed in the past three years, including jet engines and plastics, are improving on new- product and spare-part demand. The company raised the lower range of its 2005 profit forecast by 2 cents a share.
``Everybody's going to be decelerating and these guys are going to be accelerating,'' said David Giroux, an analyst at T. Rowe Price in Baltimore, which owns more than 61 million General Electric shares. ``They are just hitting their stride.''
Profit gains at U.S. corporations probably increased at the slowest pace in more than two years during the first quarter. Earnings at companies in the Standard & Poor's 500 Index likely rose 9.9 percent on average, based on analysts' estimates from Thomson Financial.
Immelt had forecast first-quarter profit of as much as 38 cents a share on March 24, after the company reduced its stake in Genworth to 52 percent from 70 percent through a share sale.
Full-year profit will be $1.78 to $1.83 a share this year, the company said in the statement.
Shares of General Electric fell 14 cents to $35.50 in New York Stock Exchange composite trading yesterday. They have climbed 16 percent in the past year, compared with a 3 percent rise in the S&P index.
Business Lines
Proceeds from the sale of a stake in its Genworth insurance business will be used to eliminate capital support to the finance units, which frees cash to invest in new technology elsewhere and a planned $15 billion, three-year share buyback.
GE's results were helped in the quarter by more orders for large-equipment service contracts and spare parts in areas including jet-engines and energy services, which rose as much as 20 percent in the three-month period ending in February, according to figures posted on the company's website before results were announced.
General Electric's businesses include the world's biggest provider of jet engines, locomotives, power-plant turbines, medical imaging equipment, private-label credit cards and aircraft leasing. Others include NBC Universal, plastics, water treatment, security, lighting, appliances, and real estate.
Emerging Markets
Immelt, 49, said in the company's annual report in March that this year he expects faster earnings growth from industrial businesses than financial areas for the first time in two decades.
``We're starting to see some effects in returns,'' said William Batcheller, director of investment management at Butler Wick & Co., which owns about 860,000 GE shares and is adding the stock to client accounts. ``It's particularly well-positioned as investors look to pay for more consistent growth over time.''
About 60 percent of sales growth over the next decade will come from so-called ``developing markets'' such as China and the Middle East, up from 20 percent in each of the last 10 years, Immelt said. General Electric expects $5.2 billion in sales from China this year.
Major equipment orders rose 76 percent in the first two months of the year, driven by energy, health care, jet engines and locomotives, according to an April 1 letter to investors.
Energy
``GE's industrial businesses -- from aircraft engines to plastics -- appear to be on track to sustain double-digit upside in the foreseeable future,'' wrote John Inch, an analyst at Merrill Lynch & Co. on April 13. He rates the stock ``buy.''
Profit for the largest industrial unit, GE Energy, was forecast to drop 10 percent in the quarter, the last such decline in eight straight quarters, as the industry stabilizes and GE adds new technologies, such as wind turbines, solar and so-called ``clean coal'' technology, said investors including Mark Demos at Fifth Third Asset Management in Cincinnati.
GE Energy made up about 42 percent of operating profit from non-financial GE units during its peak in 2002. Last year it accounted for 20 percent as turbine deliveries in the U.S. fell.
April 15 (Bloomberg) -- General Electric Co.'s first-quarter profit rose 25 percent, the most in five quarters, spurred by orders for industrial goods and Chief Executive Jeffrey Immelt's shift into faster-growing areas including health care, water treatment, security and consumer finance.
Net income climbed to $4.04 billion, or 38 cents a share, from $3.24 billion, or 32 cents a year earlier, Fairfield, Connecticut-based GE said in a statement today. Revenue at the world's largest company by market value rose 19 percent to $39.8 billion, bolstered by acquisitions.
Profit rose at least 10 percent at nine of the company's 11 main businesses. Areas where growth slowed in the past three years, including jet engines and plastics, are improving on new- product and spare-part demand. The company raised the lower range of its 2005 profit forecast by 2 cents a share.
``Everybody's going to be decelerating and these guys are going to be accelerating,'' said David Giroux, an analyst at T. Rowe Price in Baltimore, which owns more than 61 million General Electric shares. ``They are just hitting their stride.''
Profit gains at U.S. corporations probably increased at the slowest pace in more than two years during the first quarter. Earnings at companies in the Standard & Poor's 500 Index likely rose 9.9 percent on average, based on analysts' estimates from Thomson Financial.
Immelt had forecast first-quarter profit of as much as 38 cents a share on March 24, after the company reduced its stake in Genworth to 52 percent from 70 percent through a share sale.
Full-year profit will be $1.78 to $1.83 a share this year, the company said in the statement.
Shares of General Electric fell 14 cents to $35.50 in New York Stock Exchange composite trading yesterday. They have climbed 16 percent in the past year, compared with a 3 percent rise in the S&P index.
Business Lines
Proceeds from the sale of a stake in its Genworth insurance business will be used to eliminate capital support to the finance units, which frees cash to invest in new technology elsewhere and a planned $15 billion, three-year share buyback.
GE's results were helped in the quarter by more orders for large-equipment service contracts and spare parts in areas including jet-engines and energy services, which rose as much as 20 percent in the three-month period ending in February, according to figures posted on the company's website before results were announced.
General Electric's businesses include the world's biggest provider of jet engines, locomotives, power-plant turbines, medical imaging equipment, private-label credit cards and aircraft leasing. Others include NBC Universal, plastics, water treatment, security, lighting, appliances, and real estate.
Emerging Markets
Immelt, 49, said in the company's annual report in March that this year he expects faster earnings growth from industrial businesses than financial areas for the first time in two decades.
``We're starting to see some effects in returns,'' said William Batcheller, director of investment management at Butler Wick & Co., which owns about 860,000 GE shares and is adding the stock to client accounts. ``It's particularly well-positioned as investors look to pay for more consistent growth over time.''
About 60 percent of sales growth over the next decade will come from so-called ``developing markets'' such as China and the Middle East, up from 20 percent in each of the last 10 years, Immelt said. General Electric expects $5.2 billion in sales from China this year.
Major equipment orders rose 76 percent in the first two months of the year, driven by energy, health care, jet engines and locomotives, according to an April 1 letter to investors.
Energy
``GE's industrial businesses -- from aircraft engines to plastics -- appear to be on track to sustain double-digit upside in the foreseeable future,'' wrote John Inch, an analyst at Merrill Lynch & Co. on April 13. He rates the stock ``buy.''
Profit for the largest industrial unit, GE Energy, was forecast to drop 10 percent in the quarter, the last such decline in eight straight quarters, as the industry stabilizes and GE adds new technologies, such as wind turbines, solar and so-called ``clean coal'' technology, said investors including Mark Demos at Fifth Third Asset Management in Cincinnati.
GE Energy made up about 42 percent of operating profit from non-financial GE units during its peak in 2002. Last year it accounted for 20 percent as turbine deliveries in the U.S. fell.