General Electric, one of the world’s largest manufacturers, announces disappointing third quarter results
By Ian Armitage
General Electric has reported a big drop in quarterly profits as the U.S. conglomerate's finance arm was hit hard by the economic slowdown.
Net earnings were $2.5 billion between July and September, a drop of 44 percent on the $4.5 billion recorded in the same period a year earlier.
Revenue fell to $37.8 billion, down 20 percent on the $47.2bn recorded a year ago.
COST-CUTTING
Revenue from the company’s finance arm slumped by almost a third, from $17.3 billion to $12.2 billion, with profits down by almost 90 percent.
But the firm said that profits at its consumer and industrial divisions were more encouraging.
“In a global economic environment that is beginning to slowly recover, GE delivered solid third-quarter business results,” GE Chairman and CEO Jeff Immelt said. “We continue to execute our plan at Capital Finance, perform well in a slow-growth industrial environment and strengthen the balance sheet with strong cash generation. We are aggressively controlling costs, increasing our industrial backlog while expanding margins, and capitalizing on strong services performance.”
He added that there were some signs of stabilisation in the overall trading environment.
3Q ’09 Highlights:
• EPS of $0.22 (down 51 percent) with $0.05 restructuring and other charges; earnings of $2.5 billion
• Strong Industrial cash flow of $11.5 billion YTD, on pace for greater than $15 billion for full year; $61 billion consolidated cash and equivalents at quarter-end
• Company revenues of $37.8 billion, down 20 percent, primarily due to GE Capital reduction, Industrial organic sales decline, no counterpart to 3Q ’08 Olympics and effects of currency exchange rates
• Total company orders of $18.4 billion, down 18 percent; equipment orders up $0.7 billion from 2Q ’09; total backlog of $174 billion, a record high
• Industrial operating profit rate solid at 16.3 percent, up 260 bps from 3Q ’08
• Capital Finance earned $263 million in the quarter, $2 billion YTD; reserves increased $0.8 billion; favorable tax credits as expected; on track for profitable ’09
• GE Capital completed 2009 long-term debt funding plan; pre-funded >90 percent of 2010 plan to date; balance sheet reduction ahead of plan
SOURCE: http://www.genewscenter.com/content/detail.aspx?releaseid=8703&newsareaid=2
Edited by Ellie Duncan