General Electric Co has posted an unexpected 6 per cent drop in first-quarter profit in what is the biggest shock yet to American industry since the onset of the credit crisis.
Profit at America's second-largest company by market capitalization fell about 20 per cent at its financial services arms, which accounted for more than a third of GE's total revenue in the quarter. But weakness in health care and industrial divisions also weighed on results.
The news sent GE shares down more than 11 per cent in early trade on the New York Stock Exchange, the sharpest drop in two decades, dragging down global markets.
Profit from continuing operations totaled 44 cents per share, 7 cents below analysts' average forecast of 51 cents, according to Reuters Estimates. The company said also lowered its earnings forecast for the year, reflecting a slower economy and challenging capital markets.
GE shares were down $4.23 to $32.53 in early trading on the New York Stock Exchange. So far this year they are down about 12 percent, more than double the decline of the Dow Jones industrial average.
GE, which also has media and finance arms, reported a profit of $4.3 billion, or 43 cents per diluted share, compared with $4.57 billion, or 44 cents, a year earlier. Revenue rose 7.8 percent to $42.24 billion.
The sharpest drop in segment profit came at the conglomerate's financial divisions, with commercial finance down 20 percent and GE Money consumer finance down 19 percent. GE's finance arms make commercial and consumer loans, including financing purchases by corporations and individuals.
Profit at GE's industrial unit, which makes things like lighting and appliances, fell 16 per cent and health care was down 16 per cent.
Those declines overshadowed a 17 per cent rise in profit at the infrastructure unit, which has been boosted by emerging-market demand for heavy equipment like electricity-producing turbines. NBC Universal's profit rose 3 percent.