By Dai Wakabayashi BOSTON (Reuters) -
General Electric Co. on Friday posted a 24 percent rise in quarterly
profit on a return to profit growth at its energy business and steady
growth at its financial units.
The earnings improvement, which was in line with Wall Street estimates,
came from nearly every corner of the media, financial and industrial
giant's business portfolio, with all 11 operating segments posting a
profit gain of more than 10 percent.
"People were expecting the core businesses -- health care, financial
and media -- to do very well and now you're starting to see a pick-up in
its mid- to late-cycle businesses like power and transportation," said
Steve Roukis, director of research at Matrix Asset Advisors, which owns
more than 1 million GE shares.
GE Chief Executive Jeff Immelt said in a statement that the company has
put in place initiatives to ensure it can sustain earnings growth of more
than 10 percent in 2005 and beyond.
Net income rose to $4.65 billion, or 44 cents a share, in the second
quarter, from $3.75 billion, or 36 cents a share, a year earlier.
Quarterly sales rose 13 percent to $41.56 billion from $36.78 billion
last year. Orders increased 13 percent.
Analysts had expected GE, based in Fairfield, Connecticut, to earn 44
cents a share before extraordinary items on revenue of $41.85 billion,
according to Reuters Estimates.
For the full year, GE lifted the low end of its earnings per share
outlook by 2 cents, but its third-quarter outlook fell slightly below Wall
Street estimates.
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 after the market began to reel from a downturn in the
wholesale electricity market.
Under the guidance of newly appointed Vice Chairman John Rice, the
energy business has diversified its revenue stream with an emphasis on
services while reducing its dependence on cyclical turbine orders.
GE Energy's second-quarter earnings rose 10 percent to $698 million on
sales of $4.54 billion.
Shares of GE, however, were down 28 cents at $35.35 in pre-market
trading on Inet, from Thursday's New York Stock Exchange close of $35.63.
For the full year, GE lifted the low end of its earnings per share
forecast range 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.
For the third quarter, GE forecast EPS in a range of 43 cents to 44
cents on revenue of $41 billion to $42 billion, versus analysts estimates
of 45 cents per share on sales of $41.8 billion, according to Reuters
Estimates.
GE's commercial and consumer finance businesses continued to be an
earnings driver, with a profit gain of more than 20 percent in the second
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 percent to $979 million, helped in
part by a full quarter of earnings from film company Vivendi Universal
Entertainment, bought in May 2004.
GE Healthcare put to rest some concerns about margins with an
improvement in profitability, while sales grew 12 percent.
The company reshuffled its 11 business units into 6 operating segments
earlier this month, but it reported its second-quarter earnings using its
previous organizational structure.
(Additional reporting by Anupama Chandrasekaran)
© Reuters 2005. All Rights Reserved.
|