NEW YORK, N.Y. – General Electric’s new focus on oil and gas equipment helped the company to post strong first-quarter results.
GE posted lower overall first-quarter net income than a year ago, but that’s only due to the sale of NBC Universal during that period. The company said Thursday that its industrial divisions, especially oil and gas, performed well and that the global economic environment was improving.
“U.S. gets a little bit better every day. Europe is improving. The growth markets continue to expand and will provide growth during the year even with volatility,” said CEO Jeff Immelt on a call with investors.
GE earned $3 billion on revenue of $34.18 billion in the year’s first three months, down from $3.5 billion on revenue of $34.94 billion during the same period last year.
On a per share basis, GE earned 30 cents.
Adjusted to reflect continuing operations and to remove the effect of one-time charges, GE earned 33 cents per share.
GE calculates that earnings per share rose 9 per cent compared with last year, when the sale of NBC Universal and other items are removed.
Analysts had expected GE to earn 32 cents per share, on average, on sales of $34.45 billion, according to FactSet. GE shares rose 2.4 per cent to $26.74 in morning trading Thursday.
GE sold its remaining interest in NBC Universal last year as part of a new focus on building and servicing big, complicated industrial equipment such as aircraft engines, power plant turbines and oil and gas drilling equipment.
The next step for GE in that direction will be to complete a public offering of its consumer credit card division, expected later this year.
It’s supported by most industry analysts, and the company has been able to grow its revenue and profit at these industrial divisions in recent quarters.
Christian Mayes, an analyst at Edward Jones, said it will likely be well into 2015 before GE makes enough progress in its transformation to see strong growth in its overall results.
“This is such a huge company that it’s going to take a while,” he said. “But they are making progress, and seeing some decent growth in the industrial side.”
Operating profit from industrial operations rose 12 per cent in the quarter, the company said, as strong growth in their bigger units made up for lacklustre results in smaller ones.
Oil and gas profit rose 37 per cent for the quarter to $446 million. GE had been a relatively small player in oil and gas equipment until it started buying companies about five years ago.
That has paid off with oil prices high, but that level of performance may be difficult to maintain.
Oil and gas giants such as Exxon, Chevron and Royal Dutch Shell have said they will try to curtail investment in the coming quarters.
GE CFO Jeff Bornstein said in an interview Thursday that state-owned oil companies, which control far more of the world’s reserves, are likely to continue spending at a high rate.
Bornstein said a global mining slowdown driven by lower demand for commodities in China hurt the company’s transportation operations. A cold winter in the U.S. slowed sales of appliances in the first two months of the year, he said, but that has been improving.
The company is still working to cut costs in what it calls a “simplification” effort. GE said that it cut costs by $254 million in the quarter, on its way to a goal of cutting $1 billion in costs for the year.
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .