General Electric profit fell 6 percent
Industrial and financial conglomerate General Electric Co. said Friday its profit fell 6% in the second quarter, and has agreed to sell its Japanese consumer finance business for $5.4 billion.
Fairfield-based GE earned $5.07 billion, or 51 cents per share, compared with a year-earlier profit of $5.38 billion, or 52 cents per share. Revenue rose to $46.89 billion from $42.38 billion a year earlier.
On the basis of continuing operations, GE said it earned $5.39 billion, or 54 cents per share. Thomson Financial says analysts expected the company to report earnings of 54 cents per share on revenue of $45.31 billion.
"Many markets and industries remain healthy, while the U.S. economy is challenged," GE Chief Executive Jeff Immelt said in a statement. While its revenue rose 11 percent, costs from sales and expenses and interest and other financial charges rose 15 percent, slicing into the conglomerate's quarterly profit.
GE said it had agreed to sell its Japanese consumer finance unit, which includes the Lake personal loan business, wholly owned credit cards and mortgages under GE Consumer Finance Co Ltd. and its subsidiaries, to Shinsei Bank, a midsize Japanese bank. The sale is expected to close in the next quarter.
"This transaction will allow us to redeploy our resources to faster growth and higher return opportunities," Immelt said Friday.
It's the most recent in a series of moves by GE to reshape its portfolio to focus on faster growth businesses. GE announced Thursday that it wants to spin off its lighting and appliance businesses.
GE shares were down 14 cents at $27.50 in premarket trading.
GE's infrastructure business, which manufactures big-ticket items such as locomotives and water treatment plants and is making major inroads in developing countries, turned in the greatest revenue and profit gains for the second quarter. Revenue for the quarter was $17.5 billion, up 26 percent. Profit rose by 24 percent, to $3.17 billion.
Profit at GE Money fell by 9 percent, to $1.05 billion. GE Money provides retail, banking and credit services to consumers, retailers and auto dealers in 55 countries. The Japanese consumer finance unit being sold is part of GE Money.
Profit at GE's commercial finance business rose to $1.39 billion, or 7 percent, which Immelt said was ahead of expectations.
And its Healthcare segment posted profit rise of 8 percent, to $747 million. GE Healthcare's surgery business started up in early May, 20 months after GE shut down a plant in Utah that made X-ray surgical equipment amid concerns over quality control.
GE shocked investors with its first-quarter earnings April 11 that reported a nearly 6 percent decline in its profit and slashed its earnings forecast for the year. Its shares dropped 10 percent and the broader market also was sharply lower on worries about the weakening economy.
GE blamed disruptions in its financial business late in the first quarter for its inability to advise Wall Street in advance about the deterioration in its earnings.
Source: The Associated Press
Date: 11.07.2008 [ID: 173]