GE's Fourth-Quarter Earnings Rise 20% (Update 1)

Updated from 6:59 a.m. ET with detail on industrial segments and GE Capital.

NEW YORK (TheStreet) -- General Electric (GE) on Friday reported a fourth-quarter industrial profit margin of 18.3%, up 100 basis points from a year earlier.

The conglomerate was just shy of hitting its goal of a 70-basis-point improvement for its industrial margin of 2013, which rose 66 basis points from the previous year to 15.72%, excluding acquisitions.

GE reported fourth-quarter operating earnings of $5.417 billion, or 53 cents a share, rising from $4.664 billion, or 44 cents a share, during the fourth quarter of 2013. Fourth-quarter EPS, up 20%, met the consensus estimate among analysts polled by Thomson Reuters.

Revenue for the fourth quarter was $40.382 billion, increasing from $29.162 billion a year earlier.  Fourth-quarter revenue came in ahead of the consensus estimate of $40.224 billion.

For all of 2013, GE reported operating earnings of $16.882 billion, or $1.64 a share, on revenue of $146.045 billion, compared to $16.010 billion, or $1.51 a share, on revenue of $146.684, during 2012.

GE CEO Jeff Immelt said the company "ended the year with strong fourth-quarter earnings and margin growth in an improving but mixed environment."

"We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe. We had strong operating performance for the year and are pleased with our execution in 2013, taking $1.6 billion of cost out, growing margins, reducing the size of GE Capital, and returning more than $18 billion to shareholders,"  Immelt added.

Industrial Segments

  • For GE's Power & Water segment, fourth-quarter revenue rose slightly year-over-year to $7.686 billion, but profit was up 9% to $1.897 billion.  For all 2013, the segment's revenue was down 13% to $24.724 billion, while profit was down 8% to $4.992 billion.
  • The Oil & Gas segment saw a 17% year-over-year increase in fourth-quarter revenue to $5.306 billion, while profit was up 24% to $802 million.  The segment's revenue for all of 2013 was up 11% to $16.075 billion, while profit was up 13% to $2.178 billion.
  • Energy Management revenue rose 4% year-over-year to $2.012 billion during the fourth quarter, with profit down 28% to $46 million.  For the full year, segment revenue was up 2% to $7.569 billion, while profit was down 16% to $110 million.
  • The Aviation segment's fourth-quarter revenue was up 13% from a  year earlier to $6.170 billion, while profit rose 20% to $1.251 billion.  For all of 2013, Aviation revenue was up 10% to $21.911 billion, while profit rose 16% to $4.345 billion.
  • Fourth-quarter Healthcare revenue was down 1% from a year earlier to $5.117 billion, while segment profit was up 4% to $1.062 billion.  For all of 2013, Healthcare revenue was down slightly to $18.200 billion, while profit was up 4% to $3.048 billion.
  • GE's Transportation segment saw a 7% year-over-year increase in fourth-quarter revenue to $1.460 billion, while profit rose 11% to $280 million.  For all of 2013, Transportation revenue was up 5% to $5.885 billion, while profit was up 13% to $1.166 billion.
  • For the Appliances & Lighting segment, fourth-quarter revenue rose 6% year-over-year to $2.196 billion, while profit was up 23% to $142 million.  The segment's revenue for all of 2013 was up 5% to $8.338 billion, while profit was up 23% to $311 million.

GE Capital

For GE Capital, 2014 will be a year of transition, as GE's finance arm will spin off its North American consumer finance unit through a transaction that will be tax-free for GE shareholders and include an initial public offering of up to 20% of the equity in the new company. The IPO is expected to be completed "later in 2014," after which General Electric plans to make a complete exit from the consumer finance business by distributing its remaining 80% stake of shares in the new company on a tax-free basis during 2015.

The company also said it might decide to complete the disposal of the consumer finance arm by "selling or otherwise distributing or disposing of all or a portion of its remaining interest in the Retail Finance shares."

GE Capital 's revenue for the fourth quarter was down 5% from a year earlier to $11.077 billion, while its profit rose 38% to $2.493 billion.  For all of 2013, GE Capital's revenue was down 3% to $44.067 billion, while its profit was up 12% to $8.258 billion.

The unit paid $5.985 billion in dividends to the parent company during 2013, including $2 billion during the fourth quarter of 2012.

GE Capital's "ending net investment" (ENI), which excludes non-interest bearing liabilities, cash and equivalents, was $380 billion as of Dec. 31, down from $385 billion the previous quarter and $419 billion a year earlier.  Immelt's goal is for the finance unit's ENI to shrink to a range of $300 billion to $350 billion.

GE's stock was down 2.4% in early trading, to $27.33.

This chart shows the performance of General Electric's stock against the Dow Jones Industrial Average  and the S&P 500 since the end of 2011:

GE Chart data by YCharts


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-- Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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