Immelt's overseas push may help GE beat slump

General Electric Co Chief Executive Officer Jeffrey Immelt's push to sell equipment and services abroad is likely to keep profit rising as the US economy slows.

GE Infrastructure, the largest of six main businesses Immelt created in 2005, is forecast by analysts to lead fourth-quarter profit growth as healthcare earnings declined, NBC Universal coped with a writer's strike and consumer finance slowed. Fairfield, Connecticut-based GE, the world's third-biggest company by market value, reports quarterly results today.

Immelt is targeting markets in the Middle East, Asia and South America where economic growth is outpacing the United States, and GE may get more than half its revenue from overseas starting this year. Orders for major equipment needed for basic structures like power plants and airplanes rose more than 20 percent last quarter. GE is also gaining an advantage in Europe as a weaker dollar makes it cheaper to buy from a US company.

"Infrastructure is going to have a good quarter," said Stephen Hoedt, an analyst at Cleveland-based National City Corp, which owns more than 17 million GE shares. "Everything that we've seen says the global growth theme is still working."

GE may report today that fourth-quarter profit from continuing operations rose to $6.83 billion, or 68 cents a share, from $5.92 billion, or 57 cents, a year earlier, based on the average estimate from 16 analysts polled by Bloomberg.

Immelt, at his annual outlook meeting in December, predicted demand for large equipment would help profit climb to $6.6 billion to $6.8 billion, or 67 cents to 69 cents a share. GE Infrastructure includes the world's biggest makers of jet engines, power-plant turbines and locomotives. He declined to comment for this story, spokesman Russell Wilkerson said.

"They produce the goods that only a few companies in the world can," said David Bianco, an equity strategist at UBS AG in New York.

Prospects for a US slowdown, tied to the biggest slump in the housing market in 16 years, contributed to a 10 percent decline in GE's stock price in the fourth quarter. That compared with the 3.8 percent drop on the Standard & Poor's 500 Stock Index.

GE also declined after Immelt's December prediction that profit would grow this year at least 10 percent to $2.42 a share, below some analysts' estimates at the time.

Immelt's 2008 forecast relies on GE Infrastructure for 7 percentage points of the 10 percent profit climb. Because GE's multiple divisions allow one unit to help make up for weaknesses in another, it can also result in earnings that meet targets for reasons other than originally forecast. The company's six main segments also include GE Money for consumer finance, GE Healthcare, commercial finance, NBC Universal and GE Industrial.

Emerging markets likely accounted for more than a quarter of the $55 billion to $60 billion revenue at GE Infrastructure for all of 2007, John Rice, vice-chairman for that business, said in November.

That could reach one-third by 2010, he said.

Agencies

(China Daily 01/18/2008 page16)