G.E. Earnings Rise 18%; Strong Gains in Most Units
By TIMOTHY L. O'BRIEN
Published: January 22, 2005
The General Electric Company, citing robust growth in almost all of its major business units, reported record fourth-quarter earnings yesterday.
G.E. earned $5.4 billion, or 51 cents a share, an 18 percent increase from the $4.56 billion, or 45 cents a share, it earned in the last quarter of 2003.
G.E., a conglomerate with such diverse lines of business as consumer finance, industrial sales, entertainment and aerospace, has been trying to reignite profitability that began flagging shortly after the departure of John F. Welch as chief executive in 2001.
Mr. Welch's successor as chief executive, Jeffrey R. Immelt, said last month that he believed that G.E. would deliver earnings growth of as much as 17 percent this year. Analysts said the quarterly report represented a solid start toward delivering on that promise.
"People always want to draw from G.E. something about what their earnings say about the global economy," said Deane M. Dray, an analyst with Goldman Sachs. "I would say that one of the key things is that their growth rate is broad based across all of their business lines."
G.E., which reported earnings growth in 9 of 11 main business units, said that it saw particular strength in industrial sales, and that global economic strength also helped lift its bottom line.
Industrial sales rose 19 percent in the quarter, and assets in its financial services businesses rose 20 percent. The company said one weak spot was insurance, where profits declined in part because of increased loss reserves for policies underwritten.
For the year, G.E. had earnings of $16.6 billion, or $1.59 a share, up 11 percent from $15 billion, or $1.49 a share, in 2003.
It can be hard to assess the bottom line of large, diversified companies like G.E. because consolidated results can be clouded by one-time gains, acquisitions and other items that mask a company's intrinsic growth rate. But Mr. Dray noted that G.E. is predicting that the core growth rate in revenue, which it refers to as its organic growth rate, will be about 8 percent this year.
For his part, Mr. Immelt continued to send bullish signals yesterday, though he estimated G.E. would achieve earnings growth of 10 percent to 15 percent, slightly lower than what he outlined last month.
G.E.'s shares fell 24 cents, or less than 1 percent, to $35.13 on the New York Stock Exchange.
"G.E. had a tremendous fourth quarter and an excellent 2004, as we completed our strategic repositioning and returned to double-digit earnings growth in the quarter," Mr. Immelt said in a statement. "As a result, we're going into 2005 with excellent momentum."
Revenue climbed to $43.71 billion in the quarter, up 18 percent from $36.96 billion in the period in 2003. Revenue for the year reached $152.4 billion, up 14 percent from $134.2 billion in 2003.
"It was sort of steady and solid," said Daniel J. Rosenblatt, an analyst with Babson Capital Management, referring to the results. "I think people were really looking for the color for 2005 and wanted to see if G.E. was confident it could do 13 percent to 15 percent earnings growth. They seem to be very confident."
Investors welcomed G.E.'s earnings announcement early yesterday with expectations that its results, seen as a proxy for broader economic trends, might provide a sustained lift in stock prices. That did not prove to be the case, however, and prices skidded in the afternoon, with the Dow Jones industrial average falling 78.48 points, or less than 1 percent.
Analysts said that regardless of where the broader market is headed, the year would be a crucial test of G.E.'s financial performance and Mr. Immelt's stewardship.
This is "the year that G.E. has to come through, because they made a lot of big, fully priced acquisitions and investments in 2004," said Robert Friedman, an analyst at S.& P. Equity Services. "In 2005, earnings may grow in low double-digit rates, but the question is, Can G.E. generate double-digit earnings growth on a sustainable basis, given the company's enormous revenue and earnings base?"
Text:thumbsup:
Great news for the US economy
By TIMOTHY L. O'BRIEN
Published: January 22, 2005
The General Electric Company, citing robust growth in almost all of its major business units, reported record fourth-quarter earnings yesterday.
G.E. earned $5.4 billion, or 51 cents a share, an 18 percent increase from the $4.56 billion, or 45 cents a share, it earned in the last quarter of 2003.
G.E., a conglomerate with such diverse lines of business as consumer finance, industrial sales, entertainment and aerospace, has been trying to reignite profitability that began flagging shortly after the departure of John F. Welch as chief executive in 2001.
Mr. Welch's successor as chief executive, Jeffrey R. Immelt, said last month that he believed that G.E. would deliver earnings growth of as much as 17 percent this year. Analysts said the quarterly report represented a solid start toward delivering on that promise.
"People always want to draw from G.E. something about what their earnings say about the global economy," said Deane M. Dray, an analyst with Goldman Sachs. "I would say that one of the key things is that their growth rate is broad based across all of their business lines."
G.E., which reported earnings growth in 9 of 11 main business units, said that it saw particular strength in industrial sales, and that global economic strength also helped lift its bottom line.
Industrial sales rose 19 percent in the quarter, and assets in its financial services businesses rose 20 percent. The company said one weak spot was insurance, where profits declined in part because of increased loss reserves for policies underwritten.
For the year, G.E. had earnings of $16.6 billion, or $1.59 a share, up 11 percent from $15 billion, or $1.49 a share, in 2003.
It can be hard to assess the bottom line of large, diversified companies like G.E. because consolidated results can be clouded by one-time gains, acquisitions and other items that mask a company's intrinsic growth rate. But Mr. Dray noted that G.E. is predicting that the core growth rate in revenue, which it refers to as its organic growth rate, will be about 8 percent this year.
For his part, Mr. Immelt continued to send bullish signals yesterday, though he estimated G.E. would achieve earnings growth of 10 percent to 15 percent, slightly lower than what he outlined last month.
G.E.'s shares fell 24 cents, or less than 1 percent, to $35.13 on the New York Stock Exchange.
"G.E. had a tremendous fourth quarter and an excellent 2004, as we completed our strategic repositioning and returned to double-digit earnings growth in the quarter," Mr. Immelt said in a statement. "As a result, we're going into 2005 with excellent momentum."
Revenue climbed to $43.71 billion in the quarter, up 18 percent from $36.96 billion in the period in 2003. Revenue for the year reached $152.4 billion, up 14 percent from $134.2 billion in 2003.
"It was sort of steady and solid," said Daniel J. Rosenblatt, an analyst with Babson Capital Management, referring to the results. "I think people were really looking for the color for 2005 and wanted to see if G.E. was confident it could do 13 percent to 15 percent earnings growth. They seem to be very confident."
Investors welcomed G.E.'s earnings announcement early yesterday with expectations that its results, seen as a proxy for broader economic trends, might provide a sustained lift in stock prices. That did not prove to be the case, however, and prices skidded in the afternoon, with the Dow Jones industrial average falling 78.48 points, or less than 1 percent.
Analysts said that regardless of where the broader market is headed, the year would be a crucial test of G.E.'s financial performance and Mr. Immelt's stewardship.
This is "the year that G.E. has to come through, because they made a lot of big, fully priced acquisitions and investments in 2004," said Robert Friedman, an analyst at S.& P. Equity Services. "In 2005, earnings may grow in low double-digit rates, but the question is, Can G.E. generate double-digit earnings growth on a sustainable basis, given the company's enormous revenue and earnings base?"
Text:thumbsup:
Great news for the US economy
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