General Electric Beats Estimates with 44 Cents EPS

Andrew Klips  |

Saying that they have “great momentum” heading into 2013, General Electric (GE) Friday reported fourth-quarter earnings that topped analyst predictions, fueled in part by growth in its financial services business and strength in its industrial operations.

The U.S.’s largest conglomerate posted fourth-quarter revenues of $39.33 billion, a rise of 3.6 percent compared to the fourth quarter in 2011.  Net income for the Fairfield, Connecticut-based company improved by 7.5 percent over the year prior quarter to $4.01 billion, or 38 cents per share.  Adjusted earnings, those which exclude items like pension costs, rose to $4.7 billion, or 44 cents per share.  Wall Street expectations were for revenue of $38.7 billion and earnings per share of 43 cents.  Analysts generally base their predictions on operating EPS.

GE Chairman and CEO Jeff Immelt said, “The outlook for developed markets remains uncertain, but we are seeing growth in China and the resource rich countries” and that the company ended the quarter with its “largest backlog in history and a substantial amount of cash.”

GE’s backlog of equipment and services at the end of the quarter totaled $210 billion.  Operating cash climbed 48 percent to $17.8 billion for 2012.

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Profits in GE’s industrial segment, which includes energy management and aviation, increased by 12 percent during the quarter to $4.9 billion with each of its seven industrial units posting positive earnings.  The world’s biggest maker of jet engines and electric turbines said that profits in its jet engine unit grew by 22 percent during the final quarter of 2012.

GE Capital earnings increase 9 percent to $1.8 billion in the quarter and ENI was $419 billion at quarter end. Commercial Real Estate grew net income to $0.8 billion while shrinking assets by $15 billion as the company continues to scale-back and refine that business arm. GE Capital Corporation (GECC) paid a $1.0 billion dividend to the parent in the quarter, bringing the year-to-date total to $6.4 billion.

Operating margin for GE improved to 13.4 percent from 11.9 in Q4 2011.

The company repurchase of $2.1 billion of stock during the fourth quarter and $5.2 billion of stock for the year.

For the complete 2012 year, operating earnings were $16.1 billion, up 8 percent from $14.9 billion in 2011.  Operating EPS was $1.52, up 16 percent from the year prior, and up 10 percent excluding effects of a preferred stock redemption in the third quarter of 2011.  Revenue for the year was flat at $147.4 billion, although it was up 3 percent compared to 2011 when excluding the $3.7 billion pre-tax gain in 2011 from the sale of NBC Universal to Comcast (CMCSA).

The GE report is the first in a series of earnings reports from the U.S.’s largest manufacturers, including 3M Co. (MMM) and Honeywell International Inc. (HON), which will be reporting next week.

Shares of GE closed Thursday at $21.30, ahead 18 cents on the day.  Since hovering around lows in the $14 range in the latter part of 2011, shares have been steadily on the rise.

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