General Electric Co raised its 2015 outlook for its industrial manufacturing businesses yesterday as it reported a 5% increase in its quarterly industrial profits, helped by stronger performance in its power division offsetting weak oil segment results.
Revenue for GE’s manufacturing businesses rose 5%, when excluding the effects of currency swings and deals, and cost savings helped profit margins improve more than some analysts expected.
GE shares rose 1.5% in premarket trading.
Investors are focused even more greatly on the US conglomerate’s manufacturing of big-ticket products such as jet engines and power turbines as GE Chief Executive Jeff Immelt backs the company away from financial services.
“These are good numbers,” said Tim Ghriskey, chief investment officer at Solaris Asset Management. “The organic growth rates were quite compelling in various parts of the industrial segment.”
GE posted an overall second-quarter net loss of $1.36bn, or 13 cents per share. For the second consecutive quarter, results were weighed down by charges related to GE’s decision to sell some $200bn worth of financial services businesses announced in April.
Excluding one-time items and the finance businesses that GE plans to exit, the company posted operating earnings of 31 cents per share. That beat analysts’ average estimate of 28 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 1.5% to $32.75bn. For GE’s industrial businesses, revenue was $26.9bn, roughly unchanged from the year-ago quarter as four of seven segments grew.
Sales of GE’s power and water unit, which sells a variety of power turbines, rose 8%, while its oil and gas segment saw sales dropped 15%. Like other suppliers to the energy sector, GE is vulnerable to a sharp slide in oil prices as customers reduce capital expenditures.
Profit margins for the industrial businesses expanded to 16.2% from 15.5% a year ago, helped by cost cuts.