GE has just reported its first quarter results fell 35 per cent on the year– a little less than analysts had estimated. Here’s the statement:
GE reports 1Q ’09 EPS of $.26;
Technology & Energy Infrastructure Earnings +11%;
Capital Finance Earns $1.1B in 1Q ’09;
Total Backlog Stable at $171B
1Q ’09 Highlights (Continuing Operations attributable to GE)
• Earnings per share (EPS) of $.26, down 40%; earnings of $2.8 billion, down 35%
• Revenues of $38.4 billion, down 9%; Industrial sales down 1%; financial services revenues down
20%; Industrial organic revenue was flat year-over-year
• Energy Infrastructure earnings grew 19%; Technology Infrastructure earnings grew 6%
• Capital Finance earned $1.1 billion in 1Q and remains on track for profitable 2009
• Capital Finance extended $69 billion of new credit in 1Q
• Total equipment and services backlog steady at $171 billion; 1Q Infrastructure orders totaled $19
billion, down 10%
• Achieved 93% of planned 2009 long-term debt funding; $47 billion cash and equivalents
• Results do not include any impact from newly issued mark-to-market rules; implementing in 2Q
• Cash generated from operating activities totaled $2.8 billion, on plan
FAIRFIELD, Conn. – April 17, 2009 – GE announced today first-quarter 2009 earnings from
continuing operations (attributable to GE) of $2.8 billion, or $.26 per share attributable to
common shareowners, down 40% from first quarter 2008. First-quarter 2009 revenues from
continuing operations were $38.4 billion, down 9% year-over-year.
“In a recessionary environment impacting every segment of the economy, we delivered firstquarter
business results consistent with our GE Capital investor meeting on March 19th and
the framework provided last December, which included a smaller but still-profitable GE
Capital and 0-5% earnings growth in our Industrial segments,” GE Chairman and CEO Jeff
Immelt said. “Amid a continued weak economy, we’re performing well and our backlog
remains strong.
“Infrastructure and Media earnings together were flat versus last year. Energy Infrastructure
grew earnings by 19% while Technology Infrastructure had earnings growth of 6%. While
Cable continued to deliver double-digit growth, NBC Universal had a tougher performance
overall due to a soft advertising market and fewer major DVD releases compared to a year
ago.
“Despite the difficult economy, we generated $19 billion in Infrastructure orders, a decline of
10%. Importantly, high-margin service orders grew 7%. Major equipment and service
backlog held approximately flat at $171 billion vs. year-end 2008 and was up 6% versus a
year ago.
“Capital Finance earned $1.1 billion in the quarter and remains on track to be profitable for
the full year,” Immelt said. “Revenues and profitability declined year-over-year in our financial
services business and we continue to experience rising delinquencies. However, we have
taken prudent actions to address these challenges, including tightening risk requirements,
improving liquidity and reducing leverage. Also, questions about credit ratings have been
resolved. We still have a strong rating and our outlook is stable.”
On balance, positive items were mostly offset by charges in the quarter. The Company
realized a $0.3 billion after-tax net benefit from transaction gains, marks and impairments
and an incremental $0.2 billion tax benefit, which were mostly offset by $0.4 billion in aftertax
restructuring and other charges. First-quarter results do not include any impact from the
newly issued mark-to-market accounting rules, which we will implement, as required, in the
second quarter 2009.
“We are aggressively managing our cost structure to respond to challenging global economic
conditions,” Immelt said. “For 2009, we will reduce our costs by more than $5 billion. We’ve
reduced headcount and are managing company operations more efficiently, leading to
improved operating leverage in our infrastructure businesses.”
First Quarter 2009 Financial Highlights:
Earnings from continuing operations attributable to GE were $2.8 billion, down 35% from
$4.4 billion in the first quarter of 2008. EPS from continuing operations was $.26, down 40%
from last year. Segment profit fell 27% in the quarter, as strong 19% growth at Energy
Infrastructure was more than offset by a 58% decline at Capital Finance and a 45% decrease
at NBC Universal.
Including the effects of discontinued operations, first quarter net earnings attributable to GE
were $2.8 billion ($.26 per share) in 2009 and $4.3 billion ($.43 per share) in the first quarter of
2008.
Revenues fell 9% to $38.4 billion. GE Capital Services’ (GECS) revenues fell 20% over last year
to $14.4 billion. Industrial sales were $24.0 billion, down 1% from the first quarter of 2008.
Industrial organic revenue held steady year over year.
Cash generated from GE operating activities in the first quarter of 2009 totaled $2.8 billion,
down 42% from last year, primarily reflecting the lack of a GECS dividend payment in 2009
and lower progress collections, which were offset by improvements in working capital.
Historically, the Company has generated approximately 18% of its full-year cash flow in the
first quarter. GE is on track to meet its full-year cash flow plan.
“We are running GE for the long term. Over the last six months, we have made the difficult
decisions to raise equity and cut the dividend to keep GE safe and secure,” Immelt said. “On
March 19, we conducted a ‘deep dive’ into GE Capital that demonstrated the strength of our
team and our commitment to transparency. Estimated stress-test results showed that we do
not need to raise additional capital even in the Fed’s adverse-case scenario.
“Meanwhile, we are investing in growth, while lowering cost and generating cash. We see
great opportunity in a global economy that favors clean energy, affordable healthcare and
services that drive customer productivity. GE is positioning itself to lead in this reset
economy.”
So, all in all GE Capital Finance appears still to be under pressure, as is the firm’s media unit NBC, where earnings were flat. However, on the plus side CEO Jeff Immelt reminds us that the questions over the GE triple A rating are finally over, letting it focus on the future, and the company appears also to have passed the government’s worst-case scenario stress tests.