GE Posts Profit Surge; Capital Arm Nets $1.8B
General Electric Co. posted a fourth straight quarter of profit growth, beating analysts’ estimates, as equipment orders increased, and boosted the dividend for the third time since July, Bloomberg BusinessWeek reported.
First-quarter profit from continuing operations rose 58% to $3.58 billion, or 33 cents, excluding pension results, up from $2.26 billion, or 20 cents, a year earlier, GE said. That exceeded the average estimate of 28 cents a share from analysts surveyed by Bloomberg.
GE Capital, the company’s lending business, continued to recover from the financial crisis, with profits more than tripling profits to $1.8 billion in the quarter. GE’s transportation, health care, aviation, and home and business solutions businesses also posted increased earnings.
CEO Jeffrey Immelt plans to speed sales and profit growth this year and in 2012 by focusing on energy, aviation, transportation and health care as well as a slimmer GE Capital. He is spending on research and more than $12 billion of acquisitions since October, mostly in energy, as he builds technology offerings and the oil and gas division.
“GE has emerged from the recession a stronger, more competitive company,” Immelt said in the statement.
GE gained 2.9% to $21 at 6:43 a.m. before regular New York Stock Exchange composite trading.
The dividend will rise 1 cent to 15 cents a share payable July 25 to shareholders of record at the close of business on June 20, Fairfield, Connecticut-based GE said.
The company’s total order backlog, a gauge of future profitability, was $177 billion, exceeding the fourth quarter’s $175 billion. Orders at large-equipment divisions including energy, aviation and health care rose 13 percent to $19 billion.
Sales rose 6.2% to $38.4 billion, helped by more selling days as the quarter ended April 3 rather than March 28 a year earlier. Revenue included proceeds from the disposition of NBC.
“A few extra days will not normally make much of a difference in the big lumpy equipment businesses (unless you luckily catch an extra lump),” Jeffrey Sprague, co-founder of Vertical Research Partners, wrote in a note to clients this week.
The sale of NBC generated 4 cents a share, tempered by 3 cents in restructuring, acquisition and disposition costs, GE said.
The company doesn’t provide profit or sales forecasts, instead giving investors a “framework” on which to compile their own. Analysts estimated first-quarter sales of $34.3 billion, on average, according to a Bloomberg survey.
This is the first quarter the company has broken out pension costs or benefits in its income statement on a per-share basis. Including a pension cost of $163 million, net income attributable to common shareholders was $3.43 billion, or 31 cents a share.