USEUROPEAFRICAASIA 中文双语Français
Home / Fashion

GE may report Q1 profit despite US slowdown

China Daily | Updated: 2008-04-11 07:44

General Electric Co Chief Executive Officer Jeffrey Immelt's strategy to sell power plant equipment overseas and shift more resources to commercial finance is helping the company weather a slowdown in the US economy and likely led to higher first-quarter profit.

GE Infrastructure, the largest of six main businesses at the world's third-biggest company by market value, fueled the increase in earnings, according to the company's forecast. Fairfield, Connecticut-based GE may report results today.

Demand from developing regions including the Middle East to build utilities and water-treatment plants contributed to the surge at the unit, which also is the world's biggest provider of power plant turbines and jet engines. While profit probably fell at the GE Money finance unit, decisions Immelt's team made in the quarter to sell or swap some consumer-finance assets in favor of commercial lending set the groundwork for increased earnings later, even during an economic slowdown.

"It definitely helps, because basically this then becomes a more commercial finance and infrastructure play than it has been," said Stephen Hoedt, an analyst at Cleveland-based National City Corp, which owns about 17.3 million shares of GE.

The changes have begun to pay off. GE shares have risen 15 percent since Mar 10, and Immelt is one of the beneficiaries: He bought more than $5 million in shares in early March.

GE may report today that first-quarter earnings from continuing operations rose to $5.12 billion, or 51 cents a share, from $4.51 billion, or 44 cents, a year earlier, based on the average estimate from 16 analysts polled by Bloomberg. GE said in January that per-share profit from continuing operations may rise 4 percent to 10 percent to 50 -53 cents.

Gains from asset sales and securitizations at GE Money in the year-earlier quarter will make comparisons "challenging", wrote Nigel Coe, an analyst with Deutsche Bank, in a note to investors on Apr 2.

GE Infrastructure's overseas sales will rise 5 percentage points to 60 percent of the unit's revenue this year, Vice- Chairman John Rice said in January. The unit may have a profit increase of 15 percent to 20 percent in the quarter, according to the company's forecast.

In February, GE opened a $250 million desalinization plant in Algiers in partnership with the state-owned Algerian Energy Co to serve 2 million people. In January, the unit's energy business won a contract to supply 201 wind turbines to EDP- Energias de Portugal SA's Horizon Wind Energy LLC unit by 2010.

The next-best performing units may be the industrial division and NBC Universal, where earnings may increase as much as 10 percent, the company forecast on Jan 18.

"Our businesses that rely on the US consumer will face challenges," Immelt wrote in his annual letter to shareholders released last month.

"They will be more than offset by booming Infrastructure growth and steady progress in commercial finance, healthcare and NBCU."

Immelt declined to comment for this story, GE spokesman Russell Wilkerson said.

Agencies

(China Daily 04/11/2008 page16)

Today's Top News

Editor's picks

Most Viewed

Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US