Friday April 17, 01:16 PM
GE profit down 35%, but tops forecasts
NEW YORK (AFP) - US conglomerate General Electric on Friday reported a 35 percent drop in first-quarter profit to 2.89 billion dollars, but beat expectations as its financial arm remained profitable.
The company, sometimes seen as a bellwether of the US economy, also said it needed to cut costs further -- by five billion dollars -- and had been reducing staff levels.
The profit amounted to 26 cents per share, topping analyst expectations of earnings of 21 cents per share for the conglomerate that makes transportation and energy equipment, controls the NBC Universal media group and has a big financial services arm.
Revenues however fell below expectations, dropping nine percent from a year ago to 38.4 billion dollars.
Chief executive Jeff Immelt said the company would slash costs by more than five billion dollars in 2009 "to respond to challenging global economic conditions."
"We've reduced headcount and are managing company operations more efficiently," Immelt said in the statement.
Immelt said that the first-quarter results were consistent with company forecasts, adding that "amid a continued weak economy, we're performing well and our backlog (of orders) remains strong."
GE's financial services arm, whose increased risk profile from the global financial crisis led ratings agencies Standard & Poor's and Moody's to downgrade GE's AAA rating last month, earned 1.1 billion dollars in the first quarter.
Capital Finance earnings were down 58 percent from the 2008 first quarter.
Immelt said Capital Finance "remains on track to be profitable for the full year" after the company took actions to address year-over-year declines in revenues and profitability and rising delinquencies, including tightening risk requirements.
"Questions about credit ratings have been resolved. We still have a strong rating and our outlook is stable," he said.
Earnings in the conglomerate's largest businesses, in infrastructure, rose 2.7 percent to 18.67 billion dollars, with gains of six percent in technology infrastructure and 19 percent in energy infrastructure.
NBC Universal earnings fell 2.0 percent to 3.5 billion dollars, "due to a soft advertising market and fewer major DVD releases compared to a year ago," while cable business "continued to deliver double-digit growth."
GE said orders remained stable at 171 billion dollars, even though infrastructure orders fell 10 percent.
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