Updated from 6:57 a.m. EDT
reported a 25% jump in profits on nearly across-the-board revenue gains Friday, providing a pocket of strength in an otherwise grim earnings season.
The world's largest industrial conglomerate beat Wall Street's expectations and offered an upbeat forecast for its future just as major stock indices were sinking to new lows for 2005 on rising oil prices and signs of weakness in consumer spending.
GE earned $4.04 billion, or 38 cents a share, in the quarter, compared with earnings of $3.24 billion, or 32 cents a share, last year. Revenue surged 19% from a year ago to $39.81 billion. Analysts had been forecasting earnings of 37 cents a share on revenue of $38.20 billion in the latest quarter.
For all of 2005, GE expects earnings to be at the high end of its previous range of $1.78 to $1.83 a share. Analysts surveyed by Thomson First Call were forecasting earnings of $1.81 a share for the year. It expects to earn between $4.5 billion to $4.6 billion, or 42 cents to 44 cents a share, in the second quarter on revenue between $41 billion and $42 billion.
Shares of GE were recently up 88 cents, or 2.5%, to $36.38.
GE's first-quarter sales performance was paced by a 33% year-over-year jump in health care revenue to $3.32 billion, a 31% jump in consumer finance revenue to $4.69 billion, a 24% gain in infrastructure revenue to $965 million, and an 18% jump in advanced materials to $2.23 billion.
Morningstar analyst Tom Goetzinger, who thinks top-line growth is more important for GE right now, said in a research note that the company's internal revenue growth pace of 10% was "very impressive for a mature company with annual revenue likely to exceed $165 billion this year."
On the bottom line, NBC Universal's profit soared 80% from a year ago to $709 million, advanced materials profit rose 61% to $275 million, consumer finance profit rose 22% to $735 million, and commercial finance profit gained 21% from a year ago to $1.15 billion.
"Our outlook remains positive: Total orders for the quarter were up 16% over last year, and commercial finance and consumer finance assets were up 17%," GE said. "We've taken substantial pricing actions to offset the pressures of commodity inflation."
Long known for its willingness to allocate capital to a variety of businesses throughout the economy, the company indicated that it was continuing that tradition under its new chief executive, Jeff Immelt.
"Our portfolio changes have created a faster growth company, and the moves we made in the last two years are paying off in excellent performance, particularly at health care, NBC Universal and infrastructure. Revenues from our growth initiatives in services and from our new platforms, such as security and water, grew 15% and 9% respectively, and global revenues increased 33%."
Its first-quarter results included a gain of $86 million, or less than 1 cent a share, from GE's sale of stock in its insurance arm,
. The company sold 30% of Genworth last year in an initial public offering of shares. The latest sale leaves it with a stake of about 52%. It used the proceeds from the sale of Genworth to eliminate debt at GE Capital nine months ahead of schedule. As a result, the financial-services businesses will increase their dividend to GE from 10% to 40% of their second-quarter earnings. GE also plans to accelerate its $15 billion share-buyback program.
"Our dividend and share repurchasing programs have been very beneficial to our investors," CFO Keith Sherin said on a conference with analysts.