GE second quarter profit tops Wall Street view
By Scott Malone
(Reuters) - General Electric Co on Friday reported a 2.5 percent rise in profit from continuing operations, topping Wall Street expectations, as solid demand in the United States and emerging markets offset weakness in Europe.
The largest U.S. conglomerate by revenue stuck with its forecast for the rest of 2012, saying it would increase earnings at a double-digit percentage rate by pushing profit margins higher.
In a move intended in part to cut costs, GE said it will break up its big energy division into three separate units.
"The environment continues to be challenging," Chief Executive Jeff Immelt said on a conference call with investors. He said the U.S. economy was stable, adding that "Europe remains very tough, but within our expectations."
GE's industrial sales in Europe were down 7 percent in the quarter, but up 6 percent in the United States and 24 percent higher in China, said Chief Financial Officer Keith Sherin. Overall revenue rose 2.5 percent, but missed expectations.
The company, the world's biggest maker of electric turbines and jet engines, posted profit of 38 cents per share, excluding one-time items, a penny above analysts' average estimate, according to Thomson Reuters I/B/E/S. It excludes 5 cents in charges from its former U.S. subprime mortgage unit and Japanese consumer finance business.
GE's report followed two days of stronger-than-expected earnings from other industrial companies, including Textron Inc and Honeywell International Inc, indicating multinational companies were finding a way to manage through a rough economy.
"GE had the perfect opportunity to bring expectations down and blame it on Europe and that would have been the tell-tale move that would have said, 'OK, GE is beginning to suffer here in this environment.' And they didn't do that," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. Continued...