Tags: GE | Revenue | Growth | Outlook

GE Cuts Revenue Growth Outlook After Sales Trail Estimates

Friday, 19 Oct 2012 09:24 AM

General Electric Co. cut its 2012 revenue-growth forecast after quarterly sales trailed analysts’ estimates amid lower demand for equipment from medical scanners to jet engines.

Sales totaled $36.3 billion, the company said. While that represented 3 percent growth from a year earlier, it trailed the average analyst estimate of $36.9 billion. Full-year revenue will increase about 3 percent, less than the forecast of about 5 percent made last month at a meeting with investors and analysts.

GE is facing tougher markets as airlines put off non- essential engine repairs to save cash and European hospitals contend with government austerity programs enacted to blunt the region’s sovereign debt crisis.

“Our expectations were higher going into earnings today,” Steven Winoker, an analyst at Sanford C. Bernstein & Co. who has a market perform rating on the stock, said in an e-mail Friday. “We did expect some messiness to the numbers but we thought GE would find a way to pull out all stops and beat estimates.”

The Fairfield, Connecticut-based company maintained its full-year profit outlook, predicting growth of at least 10 percent. Chief Executive Officer Jeffrey Immelt is still squeezing higher earnings from industrial businesses, with profit margins in the quarter rising for the first time since 2010.

GE Shares

GE fell 2.2 percent to $22.30 at 8:37 a.m. in pre-market trading in New York. The stock reached $23.12 on Oct. 5, the highest closing price in four years.

Adjusted earnings from continuing operations rose 10 percent to $3.8 billion, or 36 cents a share, GE said. That matched an average estimate of 36 cents a share in a Bloomberg survey of 13 analysts. Industrial profit climbed 11 percent to $3.57 billion on $24.8 billion of sales.

“This is probably one of the best quarters for GE in at least four years,” Nick Heymann, a New York-based analyst at William Blair & Co., said in a Bloomberg Television interview. “Everything’s not perfect, but it’s a tough environment and GE has delivered pretty well.”

Revenue dropped 1 percent in both aviation, which posted sales of $4.78 billion, and health care, which garnered $4.31 billion.

Demand in the unit that makes imaging equipment used in hospitals was tempered by questions on U.S. health-care policy in a presidential election year as well as the European slowdown, John Dineen, the unit’s head, told investors in late September.

“I’ve got good, bad and ugly in every part of the world here,” he said then.

Total infrastructure orders fell to $21.5 billion, GE said. Including pension costs and other expenses, net income for the parent company rose 49 percent to $3.49 billion, or 33 cents, from $2.34 billion, or 22 cents, a year earlier.

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General Electric Co. cut its 2012 revenue-growth forecast after quarterly sales trailed analysts estimates amid lower demand for equipment from medical scanners to jet engines.
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2012-24-19
Friday, 19 Oct 2012 09:24 AM
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