4th-quarter earnings report shows profits rose 18 percent
GE's CEO said growth should be sustained into 2006.
STAMFORD, Conn. (AP) -- General Electric Co.'s profit jumped 18 percent in the fourth quarter, saying acquisitions and a strong global economy are ushering in a return to double-digit earnings growth at the nation's largest company.
The Fairfield-based industrial, financial and media conglomerate said Friday it earned $5.37 billion, or 51 cents per share, in the October-December period, up from $4.56 billion, or 45 cents a share, a year ago.
The results beat the consensus estimate of 50 cents per share of analysts surveyed by Thomson First Call.
"The breadth and the depth of the momentum we see is very positive," Jeff Immelt, GE's chief executive, said in a conference call with analysts. "We think we're in a period of expanding returns and have lots of cash flexibility."
Revenue in the fourth quarter was $43.7 billion, up 18 percent from $37 billion in the same period a year ago.
GE shares fell 24 cents to close at $35.13 in Friday trading on the New York Stock Exchange, approaching its 52-week high of $37.75 reached in December.
GE reaffirmed its forecast that profits would grow 12 percent to 17 percent this year, while per-share earnings would grow 10 percent to 15 percent. That growth should be sustained into 2006, Immelt said.
"GE had a tremendous fourth quarter and an excellent 2004, as we completed our strategic repositioning and returned to double-digit earnings growth in the quarter," Immelt said. "We are benefiting from strong execution of our growth initiatives and an excellent global economy."
Profits jumped 60 percent at GE's NBC television network, which now includes the recently acquired Universal television and entertainment businesses. Hit movies such as "Meet the Fockers" and "Ray" helped fuel the growth.
Immelt downplayed the prospects of more acquisitions by NBC, but GE officials have said the company has the ability to do $3 billion to $5 billion in industrial acquisitions annually.
GE often produced double-digit profit growth during the 1990s, but earnings have been sluggish the past three years as major businesses such as gas turbines for power plants have slowed.
GE embarked on a growth strategy with acquisitions that played a key role in boosting sales in the latest quarter. Industrial sales grew 19 percent in the fourth quarter, while total orders increased 15 percent over last year, Immelt said.
For the first time in several years, GE's energy and transportation businesses are expected to expand simultaneously, Immelt said. The transportation segment, which includes aircraft engines, was hurt by the Sept. 11 attacks, while the energy business is recovering from a long downturn in power plant turbines.
Profits increased 22 percent in the transportation segment, which received billions of dollars in orders for aircraft engine services around the world and its first rail order from the China Ministry of Rail in nearly two decades as the country prepares for the 2008 Olympics. Earnings declined 21 percent in the energy business, which is increasingly expanding into wind power by shipping more than 300 wind turbines in the quarter.
Profits in GE's health care segment jumped 50 percent to $860 million on strong orders for new products. In 2003, GE bought Britain's Amersham PLC for $9.5 billion in a deal to broaden its capabilities in medical technology.
For the year, GE reported earnings of $16.6 billion, or $1.59 per share, on revenue of $152.4 billion. That compared with earnings of $15 billion, or $1.49 per share, on revenue of $134.1 billion a year ago.
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