NEW YORK (TheStreet) -- General Electric (GE - Get Report) expects to begin swapping shares of former retail-lending unit Synchrony for its own stock next week, a move that will put the manufacturer on track to return $30 billion to investors this year.
"GE is executing and is on track to deliver on its 2015 goals," Immelt said Friday in a statement on the company's third-quarter earnings. The company still holds an 85% stake in Synchrony (SYF - Get Report) , which was spun off last year, and expects to generate $20 billion for investors in the share swap alone, while returning another $10 billion through dividends and buybacks.
GE's manufacturing backlog climbed 5% to $270 billion in the third quarter, compared with a year earlier, while Immelt struck deals to sell off the company's lending portfolio more quickly than he had predicted. Those sales and the Synchrony swap are part of the CEO's plan to draw 90% of profit from industrial operations by 2018 while exiting the lucrative lending business that accounted for 42% of last year's profit but had weighed on the company's stock price since the financial crisis.
Third-quarter earnings of 29 cents a share, excluding discontinued operations, compared with the 26-cent average of estimates from analysts in a Bloomberg survey. Total sales fell 1% to $31.7 billion, with manufacturing revenue of $25.6 billion, the Fairfield, Conn.-based company said Friday. That compared with projections of $28.7 billion from analysts.
Profit from manufacturing businesses such as jet engines, health-care equipment and locomotives plus the finance businesses that serve those customers-- which Immelt plans to keep -- was $3.3 billion, or 32 cents a share. Revenue in the seven industrial units declined 1% as sales slid in oil and gas and dipped in both health care and energy management.
Overall, industrial markets remain strong, Immelt said.
"The U.S. gets a little bit better every day, and Europe is appreciably better," he explained. "Clearly, growth markets are highly differentiated in terms of performance and have some headwinds as it pertains to oil prices and things like that."
Still, he said, "we see as much as activity as we've ever seen; quoting activity and deal activity are quite robust. Business for us in China is still pretty good. I still believe we can accomplish our long-term goals in the world we see today."
GE rose 1.6% to $28.03 in New York early Friday. The stock's previous 11% gain this year outperformed major indexes such as the Dow Jones Industrial Average, which dropped 3.8% and the S&P 500, which fell 1.7%.
Sales of GE Capital's loan portfolio have reached $126 billion announced so far this year, including a $30 billion deal with Wells Fargo this week. Some $60 billion of those deals have closed, the company said, and based on its progress, GE will apply in early 2016 to shed the "Systemically Important Financial Institution" designation that tightened regulatory oversight.
The label is part of the government's effort to curb risk-taking at large financial companies that might imperil their own survival and threaten the broader economy in the wake of the 2008 financial crisis, when the collapse of investment bank Lehman Brothers froze global credit markets.
"Our portfolio transformation is happening at an unprecedented pace," Immelt said in the statement. "We have a focused infrastructure business with leading capabilities in our markets. We are positioned to grow faster than our competitors."
Immelt's overhaul of the iconic manufacturer, whose roots date to Thomas Edison's invention of the light bulb, has garnered attention from activist investor Nelson Peltz, whose Trian Fund Management said this month that it had taken a 1% stake in the company.
While Peltz hasn't sought a seat on GE's board and has described a strong relationship with GE's management, he has said he expects Immelt to deliver on his strategy.
Immelt said Friday that Trian's white paper outlining its goals for GE are in sync with the company's direction. "We don't agree with everything," he noted, but Trian's position is "pretty consistent with what we've done and what we're doing."
On a net basis, including a $347 million loss from discontinued operations and pension expenses, companywide earnings fell 29% to $2.51 billion, or 25 cents a share.
Profit was crimped in part by a 16% decline in oil and gas revenue, which totaled $3.9 billion, as global energy prices fell in the third quarter. Oil and gas segment profits dipped 12% in the first nine months of the year to $584 million.
The company still remains optimistic about the business, in which it has expanded significantly in the past five years, and Immelt said success in the field didn't depend on spiking prices. Crude oil now trades at $47.14 a barrel, down 68% from a 2008 high of $147.27.
"We never thought about it reflecting $120-a-barrel oil," he said. "We're a long-term player in the oil and gas industry."
Pressure in the energy space had been expected by many investors, who in general are more interested in learning how the company is hitting its targets as curbs its reliance on longtime profit-engine GE Capital, Jeff Windau, an analyst with Edward Jones, said in a phone interview.
"They've been making tremendous progress," he said in a phone interview. Investors just want "a sense of the direction and timing."
Stockholders are also curious about how Peltz will influence management strategy, especially in terms of taking on more debt or adopting a more focused acquisition strategy, according to Ivan Feinseth, an analyst with Tigress Financial Partners.