GE's energy financing profits could double by 2020

Fri Apr 25, 2014 3:03pm EDT
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By Ernest Scheyder

NEW YORK (Reuters) - General Electric Co (GE.N: Quote) expects annual profit from energy investments to double to nearly $800 million by 2020, highlighting the conglomerate's desire to remain a financing powerhouse for industry even as it slims its credit card portfolio.

Chief Executive Officer Jeff Immelt has made energy sector growth a key part of his plan to return the company to its manufacturing roots, adding oilfield pumps, wind turbines and similar products to the portfolio in recent years.

Financing customers' purchases of those products, as well as investing in oil royalties, pipelines, wind farms and other energy projects, will compliment GE's industrial growth after the company spins off its North American consumer credit card business next year, executives said.

"This is a business that the GE board wants to grow," David Nason, head of the GE Energy Financial Services unit, said in an interview on Thursday. "It's not tied into the overall shrinking story of GE Capital. This is a core GE business."

The unit, which reported profit of $410 million last year, has a goal of posting double-digit-profit growth each year, in line with goals Immelt has laid down for the industrial part of the company's portfolio, Nason said.

"I'd love to tell you it'd be faster," he said. "I don't think anyone at GE would put the brakes on our growth."

The unit not only finances equipment purchases for customers, but directly invests in energy projects, regardless of whether they use GE products, though Nason acknowledged he would prefer to finance purchases from GE.

In 2012, for instance, the unit teamed up with JPMorgan (JPM.N: Quote) to invest $225 million in a NextEra Energy (NEE.N: Quote) Texas wind farm that used both GE and Siemens (SIEGn.DE: Quote) turbines.   Continued...

Jeff Immelt, Chairman and CEO of General Electric appears at a news conference announcing the Head Health Initiative along with the National Football League (NFL), in New York March 11, 2013. REUTERS/Mike Segar