Friday, January 23, 2009

GE earnings dim by 47%

General Electric Co. on Friday reported a 47% decline in fourth-quarter earnings per share that was at the low end of its expectations, and lower revenue that was below analysts' forecasts.

GE (GE, Fortune 500) reported earnings from continuing operations of $3.9 billion in the final quarter of 2008, or 36 cents per share attributable to common shareholders, including a one-time restructuring charge of $1.5 billion. The conglomerate earned 37 cents per share in the fourth quarter before preferred dividends.

A year earlier, the company posted earnings from continuing operations of $6.8 billion, or 68 cents per share.

Including the restructuring charges, analysts were expecting earnings per share of 37 cents. The company announced in December that it expected to earn between 36 and 42 cents per share including the charge.

"In a very tough environment, we delivered fourth-quarter business results in line with expectations we provided in December," Chairman and CEO Jeff Immelt said in a written statement.

GE posted sales of $46.2 billion for the quarter, down 5% from the fourth quarter of 2007. That was less than the $50.1 billion that analysts were expecting.

The company's strongest sector in the quarter was energy infrastructure, or power generation, which posted an 11% growth in profit on the back of a 21% growth in sales.

But the capital finance division's revenue declined 17% in the quarter and profit fell by 67%. The consumer and industrial sector had a 17% revenue decline and an 86% drop in profit.

The company also said it remains committed to providing the annual dividend of $1.24 per share.

"The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year," said Immelt in the statement. "We believe the GE dividend provides our investors with a solid return in this uncertain time."

Analysts have questioned whether the company will be able to continue to pay out an annual dividend and still maintain its perfect credit rating, but the company said it was committed to doing both.

"We run the company to have a Triple-A credit rating, and we have significantly strengthened our liquidity position," Immelt said. He said GE has been able to fund $29 billion of its $45 billion long-term debt needs for 2009.

Immelt also said, however, that the coming year was going to be rough. "We expect 2009 to be extremely difficult," he said in a statement.

GE's finance arm, GE Capital, earned $1 billion in the fourth quarter and a total of $8.6 billion for the full year.

The unit has taken a hit since the U.S. economy went into recession in December 2007 as pipelines of credit dried up. The finance arm of the conglomerate offers insurance coverage, credit cards, and commercial and personal loans.

In the company's December outlook, GE said it expects the financial services arm to earn $5 billion in 2009. Immelt maintained this outlook in the fourth quarter earnings announcement.

For all of 2008, earnings from continuing operations were $18.1 billion, or $1.78 a share, down 19% from $22.5 billion, or $2.20 a share in 2007. sales rose 6% to $183 billion.

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