GE Relies on Energy, Aviation for 4Q Profit

Jan. 23, 2012
Industrial group forecasts continued volatility in 2012

General Electric Co. saw its fourth-quarter earnings drop 18% versus the year-ago period, though the decline was not due to its Energy and Aviation business; GE said its Infrastructure unit orders for the quarter rose 15% to $28.6 billion over last year’s fourth quarter. The group benefited from very strong demand for new aircraft engines and related service orders, as well from a wide range of power plant projects around the world that rely on GE gas turbines, wind turbines, and related products.

However, GE said weakening prices for its gas and wind turbines will impact future revenues, based on its current orders.

The company said it increased R&D investment in 2011 by 16% over 2010, and predicted that will lead to over 800 new product launches in 2012. “GE’s businesses are positioned to capitalize on the investment the company has made in R&D by enabling it to successfully launch technologically advanced new products such as the LEAP-X engine, which allows airlines to operate their planes more cost effectively and with lower emissions,” it stated. It also cited a new gas-turbine technology (FlexEfficiency 50) for power plants that will reduce fuel consumption.

For the full year of 2011, GE reported earning of $14.15 billion, up 22% over 2010 earnings ($11.64 billion.) The group said its fourth-quarter slowdown was a result of lost revenue from discontinued businesses (notably, selling its majority stake in NBC Universal.) It also indicated the slow EU economy impacted its earnings, and it said expenses at its GE Capital reduced revenue in that business-finance division.

“GE’s portfolio demonstrated strength and resilience, delivering earnings growth for the seventh consecutive quarter while also generating substantial operating cash flow to support investment in our business and dividend growth,” stated chairman and CEO Jeffrey Immelt. “We are confident in our 2012 framework to realize double-digit earnings growth in our Industrial and Capital segments, increase margins, and provide dividend growth to our shareholders in line with earnings.”

However, Immelt continued: “We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth market footprint, and taking important steps to strengthen risk management. GE Capital is safe and secure and rebounding sharply. We are restructuring our businesses in Europe to reflect market conditions.”

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