GE Sees Strong Q2 Profits

NEW YORK -- General Electric Co., one of the world's biggest companies, said Friday that its second-quarter earnings jumped 24 percent as profits surged across all 11 of its business units, prompting the company to tighten its full-year forecast.

In what Jeff Immelt, GE's chairman and chief executive officer, called "one of the best quarters" in the company's history, GE reported double-digit profit growth at each of its businesses, which range from building jet engines and power plants to the NBC television network and the nation's largest financial services firm.

The company's GE Energy unit also returned a profit for the first time following more than two years of declines, but a weak third-quarter outlook - GE's first ever - came in below Wall Street targets.

GE shares fell 10 cents to close at $35.53 Friday on the New York Stock Exchange. The stock has been trading in a 52-week range of $31.42 to $37.75, and is down about 3 percent so far this year.

For the latest quarter ended June 30, GE's net income rose to $4.65 billion, or 44 cents per share. In last year's second quarter, the company earned $3.75 billion, or 36 cents per share.

Total revenue climbed 13 percent to $41.56 billion last quarter from $36.78 billion the year before. Excluding businesses GE acquired during the past year, quarterly revenue increased 8 percent, the company said.

GE's earnings were in line with the average estimate for a profit of 44 cents per share, according to analysts surveyed by Thomson Financial. Its revenue, however, just missed the consensus target of $41.62 billion.

On a conference call with analysts, Immelt said GE's second quarter was lifted by initiatives aimed at improving growth of existing businesses and an upswing in demand in several divisions that should continue propelling future business.

"We are very bullish on the second half of the year and going into 2006 with sustained strong revenue growth," Immelt said.

The upbeat results prompted GE to tighten its 2005 earnings outlook toward the high end of its previous estimate, saying it now expects to earn between $1.80 and $1.83 per share.

GE previously pegged its annual earnings at $1.78 to $1.83 per share, while analysts are forecasting earnings of $1.82 per share.

For the third quarter, GE projected its profit in the range of 43 cents to 44 cents per share on revenue of $41 billion to $42 billion. Analysts are looking for earnings of 45 cents per share on $41.89 billion in revenue.

Last year, GE earned 38 cents per share on revenue of $38.27 billion in the third quarter, and posted a profit of $1.59 per share on $152.36 billion in revenue for 2004.

The company's results in the latest quarter were also bolstered by an improved operating profit margin - which widened by 1.6 points to 15.1 percent - as well as a pickup in orders across GE's businesses.

"Total orders for the quarter were up 13 percent over second quarter 2004, and our backlog for major equipment orders grew 15 percent to $23 billion," Immelt said in a statement detailing GE's results. "In addition, global revenues increased 20 percent."

However, Merrill Lynch analyst John Inch noted that GE's overall order growth slowed from 16 percent in the first quarter, which he attributed mostly to fewer acquired orders after last year's acquisitions of medical-technology firm Amersham PLC and Vivendi Universal SA's U.S. television and entertainment assets.

Inch said GE's earnings were a penny below his quarterly estimate of 45 cents per share, but pinned the shortfall to increased corporate costs and a higher industrial tax rate and not weaker segment profit.

By business division, GE said sales of industrial equipment and products rose 12 percent to $22.4 billion, while revenue from financial services also swelled 12 percent to $19 billion.

GE's energy business - its largest industrial division - saw both profit and revenue grow 10 percent, to $698 million and $4.54 billion, respectively, in the quarter, when it landed new service contracts worth $1 billion and oil and gas orders jumped 33 percent to more than $1 billion.

But year to date, GE Energy's earnings have inched just 1 percent higher, reflecting a difficult energy market that has only recently begun to turn around.

Meanwhile, GE's massive finance unit also posted a strong quarter, with profit from commercial lending advancing 25 percent to $1.22 billion on $6.09 billion in revenue. Its consumer finance business grew earnings by 23 percent and revenue by 29 percent, GE said.

At NBC Universal, GE's television, film and theme-park business, profit surged 27 percent to $979 million, with revenue rising 12 percent to $3.77 billion, the company said.

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