General Electric Results Top Expectations -- 3rd Update

By Chelsey Dulaney 

General Electric Co. on Friday reported better-than-expected revenue and adjusted profit in its second quarter, as earnings grew in its core industrials business.

The Fairfield, Conn.-based conglomerate lifted the bottom end of its earnings outlook for its industrials business to $1.13 to $1.20 a share from its previous guidance for $1.10 to $1.20 a share.

"The environment remains one of slow growth and volatility, particularly in growth markets, while the U.S. is gradually improving," said Chief Executive Jeff Immelt in a news release.

General Electric shares, up 7% this year through Thursday's close, added 2.3% to $27.67 a share in premarket trading.

The results come as GE works to sell off the bulk of its finance arm and refocus on its industrial business. The decision to exit finance is the most momentous shift of Mr. Immelt's multiyear realignment of the company he inherited almost 14 years ago.

GE said Thursday that it has signed $68 billion worth of sales for the lending business and is on track to meet its goal of selling $100 billion in assets from by the end of the year. GE executives have said recently that sales are expected to pick up in the third quarter of the year.

Meanwhile, two big industrial deals hang in the balance for the company. GE said Thursday that it has proposed concessions to European regulators who have raised antitrust concerns about its $17 billion deal to buy the energy assets of France's Alstom SA.

The company's $3.3 billion deal to sell its appliance business Electrolux AB has also been blocked in the U.S. on antitrust grounds. GE and Electrolux plan to contest a Justice Department lawsuit, and hope for resolution by the end of the year.

For the second quarter, total industrial revenue was flat at $26.9 billion, while operating profit increased 5%.

Profit grew in nearly all of GE's industrial segments during the quarter, with its power & water segment posting 7.8% growth to $1.22 billion and the aviation unit posting 6% growth to $1.27 billion.

Crude's price slump hit the company, as profit in its oil & gas business slipped 12% to $583 million. GE sells equipment and services to oil producers that have cut plans for new projects and have demanded sharp discounts on existing orders. The company warned investors late last year that its oil and gas sales and earnings could fall this year.

Still, GE has said it has confidence in the oil business long-term, and is planning to ride things out by relying on its order backlog for exploration and drilling equipment while slashing costs.

Overall, GE said orders were up 8% for the quarter, boosted by a 37% increase in its aviation segment a 29% jump in the power & water segment.

The company reported a loss of $1.36 billion, or 13 cents a share, compared with a profit of $3.55 billion, or 35 cents a share, a year earlier.

Excluding certain charges, adjusted operating earnings came in at 31 cents a share. The net loss reflects a $3.75 billion loss from discontinued operations.

Revenue ticked up 1.5% to $32.75 billion.

Analysts polled by Thomson Reuters had forecast per-share operating earnings of 28 cents and revenue of $28.7 billion.

GE Capital revenues ticked down 1% to $6.22 billion. The company said the finance businesses it is keeping are on track to deliver 15 cents per share in earnings this year.

Write to Chelsey Dulaney at [e-mail]

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