By Chelsey Dulaney And Ted Mann
General Electric Co. reported a loss of $13.57 billion for the
first three months of 2015, weighed down by costs related to the
company's plan to sell the bulk of its lending arm and refocus on
its industrial operations.
Excluding exit charges, GE's operating earnings narrowly topped
expectations, while revenue came in below amid weakness in its
oil-and-gas business and foreign exchange impacts.
Chief Executive Jeff Immelt described the current environment as
volatile in a news release, but the company reaffirmed that it was
on track to deliver $1.10 to $1.20 a share in industrial per-share
earnings for the year.
Shares edged down about 0.4% to $27.16 in premarket trading.
Last week, GE said it would pare down the business
significantly, unveiling plans to sell off about $165 billion of
loans to borrowers like Wendy's franchisees, overseas consumers and
private-equity firms. GE also said it would sell a $26 billion
portfolio of investments in office buildings and other commercial
property to buyers that include Blackstone Group LP and Wells Fargo
& Co.
The plans represent one of the biggest strategic shifts in the
123-year history of the company. GE had warned it would book about
$16 billion in charges in the quarter to repatriate cash and for
impairments because of shortened hold periods.
Overall for the quarter ended March 31, GE's loss of $13.57
billion, or $1.35 a share, compared with a profit of $3 billion, or
30 cents a share, a year earlier. Excluding the charges, operating
earnings came in at 31 cents a share.
Revenue fell 12% to $29.36 billion. Excluding the GE Capital
exit impacts, revenue was down 3% to $33.1 billion.
Analysts polled by Thomson Reuters were expecting per-share
operating earnings of 30 cents and revenue of $34.23 billion,
excluding GE Capital exit charges.
GE's industrial revenue edged down 1% to $24.36 billion, as
growth in its power and water and transportation divisions was
offset by declines in its oil and gas and health care divisions.The
segment also took a $950 million hit from foreign exchange.
GE held the line in its oil-and-gas business, where analysts
were bracing for ugly results given the plunge in crude oil. The
company reported a profit decline of 3% to $432 million, on $3.96
billion in revenue, which was down 8% from the previous year.
Analysts who follow the company expect those returns to continue
falling through the year as oil-production companies continue to
slash capital expenditures, including on GE's oil field equipment
and services.
Oil-and-gas equipment orders fell 10% to $2.2 billion, following
on a 15% in the fourth quarter of 2014. The unit's revenue from
equipment sales fell by 13% in the first three months of this year,
GE said. And overall the company reported a 9% drop in
infrastructure equipment orders from "resource rich" countries,
including those in the Middle East, Africa and Russia--regions that
have seen economies seriously affected by the collapse in crude oil
prices.
Meanwhile, GE Capital revenues fell 39% to $5.98 billion. The
business has been a significant profit driver for the company, but
it has fallen out of favor with investors, who fear it casts a pall
on the company's industrial business.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com and Ted Mann
at ted.mann@wsj.com
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