( Bloomberg ) - General Electric Co. said fourth- quarter profit rose 15 percent on higher international sales of jet engines and power-plant turbines, drawing more than half its annual revenue from overseas for the first time as the U.S. economy slowed.
Profit from continuing operations increased to $6.82 billion, or 68 cents a share, from $5.95 billion, or 58 cents, a year earlier, GE said today in a statement, matching analysts' average estimate. Sales gained 18 percent to $48.6 billion. The world's third-biggest company by market value rose the most in four months, even as broader U.S. stock markets declined.
Chief Executive Officer Jeffrey Immelt's push into global markets was led by a 30 percent jump in the GE Infrastructure group's sales, as developing countries built cities, hospitals and airports and the dollar weakened. The strategy helped counter lower health-care profit and the slower U.S. economy.
``They've really been a beneficiary of the whole global growth story, from aircraft engines to turbines to power plants,'' Stephen Hoedt, an analyst at Cleveland-based National City Corp., said on Bloomberg Television. National City owns more than 17 million GE shares.
Fairfield, Connecticut-based GE rose $1.10, or 3.3 percent, to $34.31 at 4:01 p.m. in New York Stock Exchange trading, the most since Sept. 18. Earlier, shares jumped 5.3 percent, the most since March 2003. Recession concerns yesterday contributed to a 3.9 percent decline for GE as U.S. stocks had their largest three-day drop since 2002.
``The market needed to hear some confirmation from one of the large blue chips that circumstances are not dire, '' said Eric Boyce, who helps manage $1.5 billion at Austin, Texas-based Hester Capital Management, which has GE among its top holdings.
GE was expected to earn 68 cents a share, the average estimate of 15 analysts in a Bloomberg survey. Results have come within 1 percent of the estimate every quarter since early 2005. GE repeated its forecast for 2008 profit of at least $2.42 a share and said it is restating some results back to 2002 because of accounting errors found in a previously disclosed review.
Including discontinued operations, net income rose 4 percent to $6.7 billion, or about 66 cents. GE sold its subprime mortgage and plastic units last year, among others.
``In light of all the turmoil in the financial markets and the economic uncertainty, it's nice to have a company deliver as they said they would,'' David Katz, chief investment officer of Matrix Asset Advisers in New York, told Bloomberg Radio. Matrix has about $1.6 billion in assets under management.
For the first quarter, GE forecast per-share profit from continuing operations of 50 cents to 53 cents, an increase of 4 percent to 10 percent. The average analyst estimate is 51 cents.
Profit rose for the fourth quarter at five of the six main business groups Immelt created in 2005, with a decline of 4.4 percent at GE Healthcare in part because of changes to Medicare rules. Sales increased at all six, led by jumps of 30 percent at GE Infrastructure and 22 percent at GE Money, the consumer finance unit.
Translation of international currency into U.S. dollars added 4 percentage points to the fourth-quarter's revenue rise and about 1 cent to per-share profit, Chief Financial Officer Keith Sherin said in an interview.
Organic revenue growth, or sales from businesses GE has owned at least a year, rose 10 percent for the quarter. That exceeded Immelt's goal of two to three times annual global domestic product, or about 8 percent annually.
GE Money's 7 percent profit rise exceeded the top forecast range of 5 percent, aided by overseas sales. GE sees a sale or partnership for its U.S. private-label credit card unit, part of GE Money, in six to nine months, Immelt said. The company has already received ``expressions of interest,'' he said.
For the finance divisions, U.S. net income declined 22 percent, while profit outside the U.S. rose 37 percent in the quarter, CFO Sherin said in an interview. That helped lower the tax rate in the finance businesses, helping profit by about 2.5 cents a share, Sherin said. The consolidated rate of 16 percent for the year is less than the 17 percent forecast. For 2008, the tax rate should be 18 percent, Sherin said on the call.
The company also increased its provision for losses on receivables for all its finance businesses by $400 million to $4.55 billion and may add $500 million to $600 million this year, Sherin said on a call with investors.
Delinquency rates at GE Money rose 59 basis points in the U.S. to 5.52 percent in the quarter. GE Money's total delinquencies were at 5.2 percent. For the $22 billion of off- book assets at GE Money, delinquency rates rose to 6.59 percent.
GE Infrastructure, the company's biggest unit, had a 26 percent increase in profit for the quarter, led by gains in its oil and gas, aviation and energy units.
``Every place we went there's a need for power, there's a need for planes, there's lots of capital being invested, and there's just no sign this global infrastructure boom is slowing at all,'' Immelt told investors on a conference call.
The U.S. economy grew at a 1.5 percent annual rate in the fourth quarter and may slow to 1.1 percent in this year's first three months, according to the average forecasts of 66 economists in a Bloomberg survey that ended Jan. 8.
``The U.S. economy has slowed, housing has been tough, the consumer is feeling strain right now,'' Immelt said today. ``I would remind people that unemployment remains low and there's still good opportunities outside the U.S. for export.''
The reliance on GE Infrastructure has some peril because many of GE's other businesses aren't growing at an above-average rate, said Nick Heymann, a New York-based analyst at Stearne, Agee & Leach Inc., who has a ``hold'' rating on the company. ``GE is walking confidently on thin ice,'' he said.
GE Commercial Finance profit and revenue, helped by the equipment leasing division, each rose about 9 percent, less than the about 10 percent forecast in December. Real estate profit declined 3 percent in the division. GE Industrial, which includes appliances and factory controls, had a 7 percent profit increase, less than the 10 percent to 15 percent forecast.
NBC Universal posted a 10 percent profit increase, its fifth-straight quarterly rise, as film and cable results offset the drag from the writer's strike at the U.S. network.
GE also said that it found accounting errors regarding profits from long-term service contracts, including its aviation and energy spare-parts businesses, as part of a three-year-old internal and Securities and Exchange Commission review, and would restate some results back to 2002.
The findings cut 2002 net income by $585 million, or about 8 cents a share, GE said. Profit was shifted into subsequent years, including about 2 cents a share in 2003, 1 cent in each of the years for 2004 and 2005, and into 2006, spokesman Russell Wilkerson said. The changes will result in ``modestly higher revenues and earnings in some future periods.''
General Electric's market value trails only two companies in the world, PetroChina Co. and Exxon Mobil Corp.