Strong results in power and aviation boosted General Electric’s second-quarter results, despite an economy characterized by volatility and slow growth, the company said Friday.
Net income was $2.7 billion, compared with a loss of $1.4 billion in the year-ago period. Revenues rose 14.6% to $33.5 billion. Performance among GE’s industrial divisions varied, with oil and gas experiencing big declines in revenues and operating profit due to the rout in oil prices.
Those declines were offset by gains in some other GE divisions, such as aviation and power. GE’s earnings are heavily dependent on the industrial economy after it divested some $180 billion in financial assets over the last year to shed a government classification as a “too big to fail” institution.
“The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow growth economy,” said chief executive Jeff Immelt. “We expect strong organic growth in the second half of the year and reaffirm our 2016 operating framework.”
Copyright Agence France-Presse, 2016
Honeywell Cuts 2016 Forecast in Bow to Weaker Global Economy
Honeywell International Inc. cut its 2016 sales forecast amid sluggish global growth and lower demand for energy-related products and services.
Revenue is expected to end up between $40 billion and $40.6 billion this year, a reduction of $300 million for each figure from the previous forecast, the maker of gas processing equipment and cockpit controls said in a statement. Sales fell 2% in the second quarter after adjusting for the effects of recent acquisitions and currency shifts.
Honeywell is contending with a lackluster global economy and a plunge in the price of oil, which has weakened demand for some of the products the company sells to the oil and gas industry. The International Monetary Fund this week scrapped its forecast for a pickup in global growth this year, citing the U.K.’s vote to leave the European Union.
CEO Dave Cote is using acquisitions to help juice sales. He paid $6 billion to buy companies last year and is adding more this year, such as the $1.5 billion purchase of warehouse-automation equipment maker Intelligrated.
By Thomas Black, Bloomberg
Philips Lighting Quarterly Profit Jumps on Soaring LED Sales
Philips Lighting NV said second-quarter profit rose 16% as the world’s largest lighting manufacturer boosted sales of products based on more energy-efficient light-emitting diodes.
Adjusted earnings before interest, taxes and amortization increased to 161 million euros ($178 million), the company said in its debut earnings statement on Friday. Sales declined 6.2% to 1.73 billion euros, short of the 1.83 billion euros estimated by analysts surveyed by Bloomberg.
“We see the second quarter as a quarter of continued improvement,” CEO Eric Rondolat said in an interview with Bloomberg TV. “First at cash flow level, but also at operating margin level where we’re posting our seventh consecutive quarter of year-on-year improvement.”
The earnings are the first for Philips Lighting as a standalone company after it was spun out of Royal Philips NV, the parent company that’s shifting its focus to health care. The listing of shares came as consumers increasingly replace traditional bulbs with more energy-efficient and longer-lasting LEDs. During the transition, Philips Lighting is facing increasing competition from Asian producers of the technology as well as a drop in prices.
By Elco van Groningen, Bloomberg
ABB Profit Beats Estimates as Cost Cutting Delivers Benefit
ABB Ltd. beat estimates for quarterly profit as the world’s largest maker of power grids pushed ahead with cost cutting in a bid to counter a drop in large orders.
Operational earnings before interest, taxes and amortization rose 5% to $1.1 billion, with savings and improved productivity helping to boost margins, the Oerlikon, Switzerland-based company said in a statement on Thursday. ABB cut a fifth of the workforce at its Zurich headquarters and moved finance and human resources to India and Poland.
CEO Ulrich Spiesshofer has made management changes, cut costs and started a strategic review of the power grids division in a bid to counter the economic slowdown in China as well as in the oil and mining industries. Activist investor Cevian Capital AB is among the biggest shareholders in the Swiss maker of robots and mining equipment.
Profit beat an average estimate of $1.02 billion of analysts surveyed by Bloomberg. Quarterly sales dropped 5% to $8.7 billion while orders fell 8% to $8.3 billion, reflecting the timing of some large contracts, the company said. China continues to invest in large projects and European demand was generally strong except in the U.K., where uncertainties around the country’s vote to leave the European Union knocked orders by 34%.
By Sheenagh Matthews, Bloomberg
Dow-DuPont Shareholders Approve $59 Billion Merger of Equals
Shareholders of Dow Chemical Co. and DuPont Co. approved the companies’ historic merger, clearing a hurdle for the deal to close this year and for a later split into three entities.
Majorities of both sets of stockholders approved the 50-50 combination of the two largest U.S. chemical makers, the companies said in a joint statement Wednesday. The $59 billion all-stock transaction, a record for the industry, was announced Dec. 11.
DuPont Chairman and CEO Ed Breen will serve as CEO of DowDuPont Inc., the name of the combined entity. His counterpart at Dow, Andrew Liveris, will be chairman. Both companies are eliminating thousands of jobs as they cut billions of dollars in expenses, with another $3 billion of cost savings promised after the deal closes. DowDuPont is supposed to split into three by the end of 2018, creating separate companies focused on agriculture, specialty products and materials science.
The companies’ next hurdle is winning antitrust clearance. The U.S. Justice Department in February issued a second request for information on the combination, launching an in-depth probe. Dow and DuPont notified China’s competition agency of the deal in May and they filed with the European Commission last month.
By Jack Kaskey, Bloomberg
Swatch Profits Slow as Attacks Hit Key Markets
Swatch Group, the world’s largest watchmaker, posted a 52% fall in first-half profits on Thursday, with sales hurt by declining tourism after attacks in France and Belgium. The Swiss-based company also said revenues were down in its crucial market of Hong Kong.
The entire luxury watch sector has seen trimmed sales in Hong Kong since Chinese authorities introduced new anti-corruption measures in 2013 that included curbs on extravagant gifts. A company statement put first-half profits at 263 million Swiss francs ($266.04 million), 52% lower than during the same period of 2015.
Sales dropped by 11.4% to 3.7 billion Swiss francs ($3.74 billion).
“The situation in France and Belgium will remain difficult,” with fewer tourists travelling to the key markets following deadly attacks in Paris, Nice and Brussels, Swatch said. But the company claimed the outlook for the second half of 2016 was promising, pointing to “clear signs of tourism revival,” in Spain and Italy.
Copyright Agence France-Presse, 2016