GE profit margins fall short, shares slide

Fri Jan 17, 2014 1:26pm EST
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By Lewis Krauskopf and Ernest Scheyder

(Reuters) - General Electric Co (GE.N: Quote) posted disappointing 2013 profit margins on Friday, hurt by delayed wind turbine deliveries and poor energy management results, offsetting a 5 percent rise in quarterly earnings.

Strength from sales of oil pumps and jet engines helped the U.S. conglomerate match Wall Street expectations for fourth-quarter profit of 53 cents per share, excluding items.

But shares dipped 2.6 percent as it came up slightly short of its 2013 goal for expanding profit margins at its industrials businesses, which the company is increasingly focusing on as it reduces its exposure to the volatile financial sector.

"This was an important target they had been putting in front of investors for a long time," said Christian Mayes, an analyst at Edward Jones, who has a "hold" rating on GE.

"The transition is continuing to take time and GE is going to really have to hit these targets, and it's disappointing they couldn't quite get it done on the industrial target this year."

GE expanded its operating margin for its industrials businesses by 0.66 of a percentage point, below its full-year target of a 0.7 percentage point improvement.

GE's Chief Financial Officer Jeff Bornstein told Reuters in an interview the margin shortfall was "absolutely negligible, given the size of the company."

"Execution-wise, we like the momentum we have behind us and but for a couple of issues in the quarter, it really wouldn't have been much of a discussion," Bornstein said.   Continued...

General view of General Electric GEnx-747 jet engine before a test at the GE Aviation Peebles Test Operations Facility in Peebles, Ohio, November 15, 2013. REUTERS/Matt Sullivan