General Electric posts 7% rise in pre-tax profits
GENERAL ELECTRIC, the largest US industrial group by market capitalisation, has reported a 7 per cent rise in pre-tax profits and earnings in line with analysts’ expectations, but warned of a fall in orders as a result of plunging demand for wind turbines.
Pre-tax profits were $4.03 billion in the three months to September, on revenues up 3 per cent at $36.3 billion.
Revenues were slightly short of analysts’ average expectations but adjusted earnings per share, excluding pensions costs, were in line with forecasts at $0.36, up an underlying 13 per cent on the third quarter of 2011.
The group also reiterated its guidance that it expected double-digit earnings growth for the year as a whole.
Jeff Immelt, the chief executive, said in a statement: “The overall environment remains challenging, but GE continues to execute on our growth strategy.”
He pointed to the company’s success in increasing margins at its industrial businesses by 0.7 percentage points compared with the third quarter of 2011; a feat some analysts had expected would be difficult given the slowdown in the world economy.
While several companies have been warning of weaker demand in emerging economies, GE said revenues in its “growth market” businesses were up 9 per cent, with double-digit growth in China, Africa and Latin America.
However, a conspicuous weak spot was demand for wind turbines.
GE is the market leader in the US, where fears that a critical tax credit will not be renewed at the end of the year have caused the flow of new orders to dry up.
Orders for GE’s industrial businesses were down 5 per cent at $21.5 billion although, excluding wind and currency effects, they were up 4 per cent.
The strongest growth came from the transportation business, which builds locomotives, where pre-tax profits were up 35 per cent at $265 million, but there was also a strong performance from energy infrastructure, including gas and wind turbine, power management equipment and service for the oil and gas industry, where pre-tax profits were up 13 per cent at $1.7 billion. – Copyright The Financial Times Limited 2012