BOSTON – General Electric Co.'s (GE) third-quarter earnings inched up 1 percent as strength across many of its financial and industrial businesses outweighed hurricane-related insurance losses, the company said on Friday.
The company, whose businesses range from jet engines to media group NBC Universal (search), said the results strengthen its confidence that it will report double-digit percentage earnings growth in the fourth quarter and 2005.
"The economy we see continues to be very strong," GE Chief Executive Jeff Immelt (search) said. GE is viewed as an economic barometer for its wide range of businesses.
GE posted double-digit profit gains in 8 of its 11 businesses, including profit growth of more than 20 percent at its health care, transportation, NBC Universal and consumer and industrial units.
Profit rose to $4.05 billion from $4.02 billion a year earlier.
Earnings per share slipped to 38 cents from 40 cents a year earlier, as GE's acquisitions of Vivendi Universal Entertainment (search) and medical equipment company Amersham (search) increased the number of outstanding shares.
After required accounting changes, GE earned 36 cents a share in the year-earlier period.
The results met the analysts' average earnings forecast compiled by Reuters Estimates.
Revenue rose 15 percent to $38.3 billion, beating analysts' expectations of $37.9 billion.
GE also lifted the low end of its full-year profit forecast range by 2 cents a share. It said it now expects to report 2004 earnings of $1.57 to $1.60 per share. GE expects fourth-quarter earnings of 48 to 51 cents per share.
Analysts are expecting $1.58 and 49 cents respectively, Reuters Estimates said.
"People wanted confirmation about the outlook, and this quarter was more of an indication of progress moving ahead to next year," said Jeff Graff, an analyst at Victory Capital Management.
GE, the world's most valuable company by market value, forecasts annual earnings per share to grow 10 percent to 15 percent in 2005 after several years of steady — though not spectacular — results.
Shares of GE closed down 21 cents at $33.74 on the New York Stock Exchange. Since the start of the year, GE shares have risen 9 percent compared with a 1 percent rise on the S&P 500.
GE, based in Fairfield, Conn., had insurance losses of $308 million from four hurricanes that hit the southeastern United States during the quarter.
Profit in GE's insurance segment fell 80 percent. The divestiture of part of its insurance business also cut into earnings at the division.
GE Energy's profit was down 35 percent in the quarter, but the company affirmed its outlook for an earnings rebound in 2005. The business has been hurt by a downturn in the wholesale electricity market since 2001.
Immelt in a conference call with investors and analysts said high benzine prices hurt profitability at its advanced materials unit but added that the company will be able to offset costs in the coming quarters.
Immelt expects oil prices to remain high in 2005 but said other inflationary pressures will ease. Crude oil prices have been setting record highs in recent days and are currently above $53 a barrel.
Oil prices and Friday's soft jobs data worried some investors.
"I just don't see how GE is going to meet its growth estimate, given the current environment," said Fred Sears, portfolio manager at Eastern Point Advisors in Lynnfield, Mass. Sears does not hold any GE shares.