General Electric yesterday reported a $13.6bn first-quarter loss on charges from its plan to sell most of GE Capital as profits rose in four of seven industrial businesses.
The big loss had been expected after GE said a week ago that it would take about a $16bn charge due to the GE Capital divestment. GE reported $3bn in profits in the year-ago period.
The plan to sell most of its finance operations is part of an overhaul directed by chief executive Jeff Immelt to emphasise the company’s industrial and technological prowess.
In the first quarter, a big gain in aviation profits and smaller increases in transportation, appliances and lighting, and healthcare made up for lower profits from power and water, and oil and gas.
Overall industrial profits rose 8.6% to $3.6bn.
Chief financial officer Jeff Bornstein told an analyst conference call that GE is on track to meet its target of $1.10-$1.20 per share in 2015 industrial earnings.
“We are running our businesses to the high end of that range,” he said.
Immelt said the company was also on track to complete its takeover of the energy business of French company Alstom in the second half of the year.
GE had said April 10 that it would take a charge of about $16bn in concert with the GE Capital sale to cover such costs as taxes on repatriated earnings and charges on businesses held for sale.
The capital charges are “largely impossible to analyse,” said a Deutsche Bank note that described the results as “in line.”
“Overall, we are encouraged by GE’s favourable margin performance and reiteration of the annual Industrial guidance,” the German bank’s note said, while highlighting concerns about the company’s 2016 revenue outlook and a drop in industrial cashflow in the first quarter.
The first quarter’s earnings were also held back by the drag from the strong dollar, which dented revenues by $950mn.
“GE performed well in the first quarter, in an environment that remains volatile but with continued growth opportunities in infrastructure,” Immelt said.
