GE Profit Falls 32%

April 16, 2010
But the numbers were better than expected

General Electric reported on April 16 steep drop in first-quarter profit saying its ailing financial services arm was recovering.

Net profit was $1.87 billion dollars, 32% lower than a year ago.

GE said that profits from continuing operations were $2.3 billion, a decline of 18% from a year ago.

GE, often considered a bellwether of the world's largest economy because of its wide array of businesses, said it saw continued improvement in operating conditions. "We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets," GE CEO Jeff Immelt said.

Revenues totaled $36.6 billion, down 5% from a year earlier, while industrial revenues were off 2%.

Total company orders amounted to $17.1 billion, and the backlog of equipment and services held steady from the prior quarter at $174 billion.

"Our 2010 framework remains achievable with potential for upside," Immelt said. "We may evaluate additional restructuring that will improve our earnings power going forward."

Immelt said the company has "substantial" cash available and expected to grow earnings and dividends "in 2011 and beyond."

Overall revenue in the first quarter continued to bear the brunt of the company's struggling financial service arm, GE Capital Finance, where sales fell 9% from a year ago to $13.2 billion.

But GE said the unit was stabilizing amid an environment of difficult credit and rising loan defaults after the collapse of Lehman Brothers in 2008. "We are very encouraged by GE Capital's performance," Immelt said, adding that "losses seem to have peaked." GE Capital had earnings of about $600 million and losses, delinquencies and non-earning assets declined in the quarter.

Immelt said that GE Capital still struggled with the troubled commercial real estate but the risks were expected to be manageable. "We have strengthened the GE Capital franchise and are on track for solid earnings growth."

Copyright Agence France-Presse, 2010

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