GENERAL ELECTRIC (GE) has posted an 80 per cent rise in profit that topped Wall Street’s expectations, helped by a strong recovery in its finance arm.
However, the results, which followed a series of better-than-expected earnings reports from top US manufacturers, failed to impress investors and shares of the largest US conglomerate fell 2 per cent yesterday.
The world’s biggest maker of jet engines and electric turbines also raised its dividend for the third time since July, although chief executive Jeff Immelt warned investors that GE did not plan to keep up that pace of increases.
Analysts noted that GE’s 6 per cent rise in revenue – which came across all divisions – may have been inflated by a change in its fiscal calendar that added six days to the first quarter.
GE shares were down 41 cents at $19.99 on the New York Stock Exchange, with the broad Standard Poor’s 500 index up 0.5 per cent.
The company was part of a wave of top US manufacturers that have topped analysts’ first-quarter profit expectations.
United Technologies, Honeywell International and Danaher also did so and went on to raise their profit forecasts for the year, saying the US economic recovery was firming and that demand from emerging markets, including China and India, remained robust.
GE expected “very solid operating earnings growth” this year, Mr Immelt said.
An index of US economic health released yesterday rose for the ninth straight month in March, showing the recovery has not been hit by Japan’s nuclear crisis.
GE also raised its quarterly dividend by 1 cent to 15 cents, for a 50per cent cumulative increase since July. GE aims to pay out 45 per cent of its profit to shareholders.
“Over time we’re going to get back to an annual dividend increase,” Mr Immelt said.
Fellow blue-chip manufacturer United Tech, which last week hiked its payout by 12.9 per cent, aims to raise its dividend every five quarters.
Since emerging from the financial crisis and selling a majority stake in NBC Universal to Comcast, GE has invested heavily, spending $14 billion on takeovers over the past year. That pace of deal-making is likely to slow.
“Our major transactions are done for 2011,” Mr Immelt told investors. “Dividend and [share] buybacks take higher priority for the rest of the year.”
Some investors expressed concern about GE’s recent push in the energy sector. It was the one GE division to see profit fall in the quarter, although GE officials said they expected it to turn around this year.
The company, based in Fairfield, Connecticut, said first-quarter earnings attributable to common shareholders came to $3.36 billion, or 31 cents a share, up from $1.87 billion, or 17 cents a share, a year earlier.
Factoring out one-time items, profit came to 33 cents a share.
Profit at GE Capital, which the company has been trimming back, more than tripled. Revenue rose 6 per cent, also topping expectations.
Revenue at GE’s industrial units was up 8 per cent; factoring out the extra six days it would have risen 6 per cent, according to chief financial officer Keith Sherin.
GE, which designed the nuclear reactors used at Japan’s stricken Fukushima plant, said the crisis had a “small financial impact” on its results. – (Reuters)
