G.E. Profit Rises 51%, Topping Forecasts
By CHRISTINE HAUSER
Published: January 21, 2011
General Electric said on Friday that it closed the books on 2010 with strong earnings and a backlog of new orders that position the company for growth in 2011.
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President Obama toured a G.E. plant in Schenectady, N.Y., on Friday with Jeffrey Immelt of G.E.
Fourth-quarter income rose 51 percent, to $4.5 billion, or 42 cents a share, from $3 billion, or 28 cents a share, a year earlier.
Earnings from continuing operations were $3.9 billion, or 36 cents a share, compared with $3 billion in the quarter a year ago. The results topped analysts’ forecasts of 32 cents a share, according to a survey by Thomson Reuters. Net income for the year was $11.6 billion, compared with $11 billion in 2009.
“G.E. exits 2010 with significant momentum,” the chief executive, Jeffrey R. Immelt, said in a statement.
The company “ended 2010 with three consecutive quarters of strong earnings growth,” which was expected to continue in 2011 and 2012, he said.
Revenue rose 1 percent to $41.4 billion in the fourth quarter, exceeding analysts’ estimated revenue of $38.9 billion. For the year, revenue was $150.2 billion, compared with $155.3 billion in 2009.
Stock in G.E., which is based in Fairfield, Conn., rose $1.31, or 7 percent, to $19.74 a share.
With its diverse portfolio of business and finance units, including the nation’s largest nonbank financial institution, G.E.’s report presented a glimpse of expectations for the economy as it recovers from the downturn, and for the potential of global markets where the company is casting around for opportunities.
“It is like a very diversified little country,” Richard Tortoriello, an equity analyst with Standard & Poor’s, said in an interview before the release of the report.
G.E. increased its dividend twice in 2010, the report noted. In July, it rose to 12 cents a share from 10 cents. In December, it rose to 14 cents, the report said.
That was less than the 31 cents a share the company paid until February 2009, when, for the first time since the Great Depression, the board cut it to conserve cash.
In a conference call, Mr. Immelt said the transportation, health care and finance units would drive earnings in 2011.
Infrastructure orders in the fourth quarter were up 12 percent. “This is the highest order intake since 2007,” he said.
Orders in the fourth quarter were up 20 percent for equipment and 5 percent for services. Energy infrastructure orders expanded 4 percent. “We feel very good about the backlog and how we are positioned,” he said.
The total backlog increased to a record $175 billion at the end of the year, according to the report.
But some analysts said G.E. would have to address concerns about pricing. “The pricing in orders was down about 1 percent, and that was something that needed to be watched,” said Steven Winoker, an analyst at Bernstein Research, “given excess capacity and increasing competition globally.”
He added: “They put up a relatively good and clean quarter.”
The company said GE Capital reported net income of $1.1 billion in the fourth quarter, almost a billion more than a year ago, helped by lower loss rates.
Analysts and investors have tried to see if the company is deriving strength from industrial lines rather than from a recovery in the finance unit, which struggled in the collapse of the commercial real estate market and from defaulting consumers.
The conglomerate has been simplifying its portfolio and shedding noncore financial assets.
On Tuesday, a proposed deal to combine Comcast and NBC Universal was approved by the Federal Communications Commission and the Justice Department. The decision clears the way for General Electric to sell Comcast a majority stake in the network.
Mr. Immelt said the company had expected the deal to close in the last quarter of 2010; now it is scheduled to close on Jan. 28.
“This delay resulted in a lower-than-expected tax rate in the fourth quarter and will lead to a higher tax rate in the first quarter,” he said in the statement. “We expect this will contribute to a significantly higher G.E. tax rate for full-year 2011.”
Mr. Tortoriello said the company should continue to benefit from emerging market strength and a modest recovery in consumer spending in the United States and Europe.
This week, G.E. announced that it was completing five agreements in aviation, energy and rail sectors that were expected to deliver more than $2 billion in revenue.
In November, during a visit to India with President Obama, Mr. Immelt said that G.E. had completed deals for power turbines and jet engines worth more than $1.4 billion and planned to double overall exports in five years.
G.E. also announced a series of investments in late 2010 that reflected its intentions to bolster businesses in crucial sectors, especially in the energy division. In October, it said it had agreed to buy Dresser, a privately held energy infrastructure and services company, for $3 billion.
In December, General Electric said that it would buy Wellstream Holdings, a British oilfield services company, for $1.3 billion.
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