GE beats profit estimates, overcoming sluggish global economy

GE’s challenges are multiple but consistent, Chief Financial Officer Jeffrey Bornstein said, borne out of slow global economic growth and turbulent geopolitical times – everything from the United Kingdom vote to leave the European Union to Middle East turmoil and currency shifts.

GE revenue rose to $33.5 billion in the quarter, compared with $29.2 billion in the same quarter a year ago. GE must generate significant growth in the second half of this year in an “extremely challenging” environment, he said.

Sales from continuing industrial operations, known as organic segment revenue, fell 1 percent to US$24.4 billion, less than some analysts expected.

Performance among GE’s industrial divisions varied, with oil and gas experiencing big declines in revenues and operating profit due to the rout in oil prices. Analysts polled by Thomson Reuters expect the company to report profit per share of $1.50.

GE’s net earnings were 30 cents per share, compared to last year’s GAAP loss of 13 cents per share, although in all it reported four different earnings numbers, emphasizing that comparisons with last year’s second quarter are hard. Industrial operating plus Verticals earnings increased 48% to $4.67 billion from $3.15 billion, last year.

Despite a general slump in oil and gas profits, the three months ended June were highly successful, as underlying earnings per share hit 51 cents for the US’s largest manufacturer.

GE shares fell 2.2 percent at US$31.87 in mid-day trading on the New York Stock Exchange. “We will continue to invest in key growth initiatives such as GE Digital, while returning ~$26 billion to investors through buyback and dividends”, said Jeff Immelt, chairman and CEO. The Fairfield, Conn.-based company reiterated its projection for full-year earnings of as much as $1.55 a share, along with buybacks of $18 billion and dividend payments of $8 billion.

During this quarter, the company announced over $25 billion in orders and commitments at the Farnborough Airshow for GE and its partner companies.