GE Conference Call Highlights

123jump.com Staff
13 Apr, 2007
New York City

General Electric reported earnings of 44 cents per share in the first quarter, up 1.5% on revenue rise of 5.7% to $40 billion. Infrastructure segment reported a solid revenue growth in locomotives, turbines and energy equipment. The subprime lending at GE substantially declined in the quarter and company provisoned $330 million for losses. Commercial finance division reported a revenue gain of 15% and profit boost of 21%.

[R]Top 10 highlights of GE earnings conference call[/R]

GE reported earnings in the first quarter of 2007 rose 2.25% to $4.51 billion or 44 cents per share compared to $4.44 billion or 42 cents a share. Revenue rose 5.7% to $40.2 billion from $38.03 billion a year ago. Organic revenue rose 8% and asset rose 22%. Backlog of major equipment advanced 32% to $37 billion. Return on total capital increased 100 basis points to 18.8% and operating profit margin rose 1.3% to 14.4%, and operating cash flow gained 10% to $7.4 billion.

The company anticipates strong year for infrastructure, aviation, energy and commercial finance business. Emerging markets orders are up 14% and service revenue rose 10% in the first quarter. Service portfolio rose 9% to $94 billion.

Operating profit at infrastructure segment was 16%, at industrial segment 8.1%, at healthcare 14.3% and at NBCU 19.8%. Overall operating profit at the company declined 11.3% from 11.5%.

Orders for aviation for major equipment declined 10%, energy segment rose 17%, healthcare gained 2%, oil and gas advanced 12% and transportation declined 63% totaling 2% decline in overall orders but rose 3% including services in the quarter. New total orders for major equipment totaled $9.5 billion in the quarter.

Loan delinquencies in the first quarter for equipment financing were reported at 1.26% and at GE Money were at 5.48% totaling to 5.18%.

Total restructuring cost was reported at $354 million with a total headcount reduction of 3,900. Restructuring expense by business is as follows: $85 million in infrastructure, $143 million in industrial, $48 million in commercial finance and $47 million in GE Money, $22 million in healthcare and $9 million in NBCU.

Infrastructure revenue in the quarter were up 18%, segment profit were up 28%, orders were 2%, equipment backlog was up 35% and the company forecasted equipment revenue to rise 20% in the second quarter. GE Money revenue rose 14% and segment profit roe 2% and asset rose 20% and forecasted 10% rise in segment profit in the second quarter. Broad based global revenue growth of 2% was offset by weakness in WMC & Japan.

Industrial segment revenue rose 5% with retail appliance sales growth of 5% and but the segment profit fell 20%. Revenue at lighting rose 10% and productivity in the division rose 4.3%. Revenue at plastics declined 3% on 1% decline in profit and 4% fall in price and 32% price hike in benzene. Second quarter profit outlook for the segment is a decline between 10% and 15%. Revenue at NBC Universal declined 22% in the quarter from a year ago, and revenue declined 8% excluding Olympics. Segment profit rose 6% from a year ago. Revenue at healthcare was flat and profit rose 5%. The company forecasted a profit growth between 5% and 10% in the second quarter. Revenue at Commercial finance segment rose 15% and profit rose 21% and assets grew 26%. The company forecasted second quarter profit rise between 10% and 15%.

Tight market conditions and underwriting guidelines have had dramatic impact in lending for sub-prime loans issues by GE. The total loans issued in fourth quarter of 2006 were over $9 billion and only $3.4 billion loans were issued in the first quarter and only $500 million of loans in March 2007. After tax basis reserves had to be increased by $330 million and pre-tax basis that was app $550 million.

The company reaffirmed its annual earnings per share guidance between $2.18 and $2.23, an increase of 10% from a year ago.