NEW YORK (Reuters) - Citigroup Inc. (C) posted a 3 percent rise in fourth-quarter operating profit Friday, helped by revenue growth in all four main business lines, though net income fell and expenses grew faster than revenue.
Earnings from continuing operations for New York-based Citigroup rose to $5.13 billion, or $1.03 per share, from $4.97 billion, or 98 cents.
Net income fell 26 percent to $5.13 billion, or $1.03 per share, from $6.93 billion, or $1.37. Year-earlier results included a $2.1 billion gain from the sale of Citigroup's asset-management business.
Analysts polled by Reuters Estimates on average forecast profit of $1.02 per share.
Revenue rose 15 percent to $23.83 billion, compared with forecasts for $22.7 billion. Expenses grew 23 percent to $13.96 billion, which Citigroup attributed to increased business, acquisitions, investment spending and the effect of a year-earlier release of legal reserves.
In a statement, Chief Executive Charles Prince pledged "a thorough review of our entire expense base to ensure that we operate as efficiently and effectively as possible."
Prince has been under pressure from many investors and analysts to curb spending and generate faster revenue growth, especially in long-struggling U.S. consumer operations, Citigroup's biggest business.
Last month, Prince installed Robert Druskin as chief operating officer, and pledged to slash investment spending by more than half in 2007.
Citigroup raised its quarterly dividend 10 percent to 54 cents per share from 49 cents.
Citigroup shares closed Thursday at $54.39 on the New York Stock Exchange. They have risen 13 percent in the last year, the same as the Philadelphia KBW Bank Index. Since Prince became chief executive in October 2003, Citigroup is up 20 percent and the index up 33 percent.
Consumer banking profit rose 7 percent to $2.61 billion, as revenue increased 9 percent to $12.88 billion.
In U.S. consumer businesses, profit rose 48 percent to $2.09 billion. Revenue increased 14 percent to $7.96 billion.
Corporate and investment banking profit fell 14 percent to $1.75 billion, in part because of the year-earlier reserve release. A 32 percent revenue jump from fixed income helped drive a 14 percent overall revenue increase, to $7.08 billion.
Wealth management profit, including the Smith Barney brokerage and private bank, rose 38 percent to $411 million. Profit from alternative investments rose 56 percent to $549 million. Assets rose 26 percent to $1.88 trillion.
BOSTON (Reuters) - Diversified conglomerate General Electric Co. (GE) said Friday fourth-quarter profit rose at all units but GE Industrial, which was hurt by poor performance in the plastics business.
The company said it may put the plastics unit up for sale and that it had overstated past earnings dating back to 2001 by a total of $343 million, as a result of its accounting for interest rate swaps.
GE, with operations ranging from jet engines to commercial lending, said net income came in at $6.58 billion, or 64 cents per diluted share, compared with $3.16 billion, or 56 cents per diluted share, a year earlier.
Analysts had expected profit of 64 cents per share, according to Reuters Estimates.
The world's second-largest company by market capitalization, after Exxon Mobil (XOM), reported revenue of $44.62 billion, up 11 percent.
Profit at GE's industrial unit, which in addition to plastics makes products including light bulbs and appliances, fell 12 percent to $673 million, while revenue slipped 5 percent to $8.04 billion.
"We're seeing exactly why the company made a decision to divest the plastic unit because the industrial performance is just not good," said Peter Smith, analyst at Morningstar. "That just serves as evidence for why the company has been so active in the M&A market in the first couple weeks of the year."
In the past two weeks, the Fairfield, Connecticut-based company has disclosed plans for $14.83 billion worth of takeovers, including some businesses of Abbott Laboratories Inc. , the aerospace business of Britain's Smiths Group Plc and Houston-based oil and gas fields equipment maker Vetco Gray.
The size and breadth of GE make it a bellwether of the U.S. economy.
GE shares fell as much as 60 cents, or 1.6 percent, to $37.40 in early electronic trading, down from a $38 close on the New York Stock Exchange.
The plastics business has been a weak spot for GE for the past year, hurt by the high price of benzene, a key raw material. For months investors have been wondering when GE would move to divest the unit.
"We will continue to exit slower growth and more volatile businesses and we are currently reviewing the potential disposition of our plastics business," said GE Chairman and Chief Executive Jeff Immelt, in a statement.
Analysts have said the plastics unit could fetch as much as $10 billion, with potential buyers including private equity players or rivals, such as BASF AG , Dow Chemical Co. or Saudi Arabia's Saudi Basic Industries Corp.
GE also said profit rose at its NBC Universal media business, after a year of declines.
GE also said it would restate its financial results for 2001 through 2005, as well as for the first nine months of 2006, adjusting for its accounting for interest-rate swaps.
The company said it expects first-quarter earnings of 43 cents to 45 cents per share, which it said would reflect 8 to 13 percent growth over prior-year results.
"That's double-digit growth and when you look at the S&P, it's only growing at about 6 percent," said Thomas Leritz, portfolio manager at Argent Capital Management, in Clayton, Missouri, who follows the company but does not own the shares. "When you look at the company, they've got really good global reach. It's a good play on globalization."