GE beats profit forecast but cuts revenue target

General Electric Co beat analysts' profit forecasts in the third quarter, but revenue growth remained sluggish, prompting the company to scale back expectations for full-year revenue and profit on Friday, sending its shares sharply lower.

The industrial giant’s adjusted profit jumped 10 per cent to 32 cents a share, exceeding the 30 cents that analysts had estimated on average, according to Thomson Reuters I/B/E/S.

GE raised its full-year target for cash returned to shareholders to $30 billion (€27.6 billion) from $26 billion and noted it had returned $25 billion in the first three quarters. But slow economic growth, particularly in the oil and gas business, weighed on revenue. Organic revenue, which excludes growth from acquisitions, grew 1 per cent in the quarter.

The company's shares were the biggest decliner on the Dow Jones Industrial Average index, falling 2 per cent to $28.48 in early trading on the New York Stock Exchange.

Slump

Analysts had been looking for GE to report stronger revenue growth after a weak first half, but that was stymied by a 25 per cent slump in oil and gas revenue in the quarter.

Investors were sceptical that GE’s organic revenue growth could hit 5 per cent in the fourth quarter, Sanford C Bernstein analyst Steven Winoker wrote in a note.

Anaemic third-quarter growth “again calls into question the company’s ability to hit the 5 per cent” target, he said.

Company officials were more sanguine. Cost cutting in oil and gas and other businesses and a diminishing drag from foreign exchange translation should allow GE to deliver $2 a share in adjusted earnings in 2018, chief executive Jeff Immelt said on a conference call. – (Reuters)