FAIRFIELD, Conn. – General Electric Co. posted record second-quarter profits Thurday, helped by its gas turbine and aircraft engine manufacturing operations, which offset weaker results from units hurt by the economic slowdown.
GE announced Chairman Jack Welch would retire after the Sept. 7 board meeting. Welch had delayed his departure by several months to complete the proposed $42 billion purchase of Honeywell International Inc., which European regulators rejected last week.
GE, the world's largest company in terms of stock market capitalization, said earnings from ongoing operations totaled $3.9 billion, or 39 cents per share, compared with $3.38 billion, or 34 cents per share, a year ago.
The results met the expectations of analysts, who had forecast a profit of 39 cents per share, with estimates ranging from 38 to 40 cents per share, according to tracking firm Thomson Financial/First Call.
GE also reiterated full-year profit guidance, forecasting earnings of more than $1.45 per share. That falls within current targets -- analysts expect a profit of $1.47 per share, with estimates ranging from $1.45 to $1.50 per share.
Revenues fell 3 percent to $32 billion for the quarter, due in part to a 13 decline in revenues from GE Capital.
But on a normalized basis, GE said companywide revenues rose 6 percent, with GE Capital revenues up 5 percent when excluding factors such as businesses the company left.
The normalized revenue figure takes out results from business units engaged in anticipated contractions, principally IT Solutions, Wards and the planned transition of restructured insurance policies from Japanese acquisitions, GE said.
Some Concerns
``The fact that GE is delivering 15 percent earnings growth in this environment is in itself a victory,'' said William Fiala, an analyst at Edward Jones. ``But the numbers don't come without some concerns.''
GE's results were again driven by gains in its power systems and aircraft businesses. That strength helped mitigate declining revenues and profits from the ``short-cycle'' lines such as appliances, which have been hurt by a weak economy.
Power Systems saw profits rise 63 percent to $1.23 billion on a 38 percent jump in revenues. The division's orders totaled $5.3 billion and shipments of heavy-duty gas turbines jumped 55 percent to 90 units.
The division dispatched 22 mobile power generation units in response to short-term demand for additional power in the United States. Power Systems also added $2 billion in new service agreements during the second quarter, bringing total commitments for those multi-year agreements to $19.6 billion.
The aircraft engines operation generated a 10 percent increase in profit on an 11 percent increase in sales.
Profits at GE Capital rose 16 percent to a record $1.476 billion before accounting changes. Total revenues however fell 13 percent due to special items such as Wards.
Appliance, Broadcasting Units Decline
Among the poorest segments, the appliance unit reported a 22 percent decline in profits as revenues fell 11 percent. Profits at the NBC Broadcasting operation fell 15 percent on a 6 percent slip in revenues while profits at Plastics fell 15 percent on an 11 percent decline in unit revenues.
``The record results for the second quarter once again demonstrate the ability of GE's diverse mix of leading global businesses to deliver earnings growth, high margins and strong cash generation during a challenging economic period,'' Welch said in a prepared statement.
GE noted it was disappointed the Honeywell deal could not be completed. The transaction was rejected by European regulators on concerns the merger would hurt competition in several aerospace and related markets.
But GE exited the saga relatively unscathed, as its second-quarter results showed.
``Although we are disappointed about the European Commission's July 3 decision on the Honeywell merger, these second-quarter results show the continued vitality of GE's diverse group of global businesses,'' Welch said.
Shares of GE, a component of the blue-chip Dow Jones industrial average, climbed $1.50, or 3.4 percent, to $46.11 in morning trade on the New York Stock Exchange. The stock is relatively unchanged compared to a year ago but has still outperformed the broad-based Standard & Poor's index.
-- The Associated Press and Reuters contributed to this report.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox