PRESS RELEASE
GE Reports First-Quarter EPS up 10% to $.44 per share;
Reaffirms Total Year 2007 Guidance
1Q ’07 Highlights (Continuing Operations)
Earnings per share (EPS) of $.44, up 10%; Earnings of $4.5 billion, up 8% Revenues of $40.2 billion, up 6%; Organic revenue growth of 8% Global revenues of $19.6 billion, up 9%, and developing markets revenues of $7 billion, up 14% Major equipment backlog of $37 billion, up 32%; services orders up 11%; financial services assets grew 22% Segment operating profit margin increased 130 basis points to 14.4% Return on average total capital (ROTC) increased 100 basis points to 18.1% Cash flow from GE’s operating activities (CFOA) of $7.4 billion, up 10%
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Fairfield, Conn., April 13, 2007 - GE announced today record first-quarter 2007 earnings from continuing operations of $4.5 billion or $.44 per share, up 8% and 10%, respectively, from first quarter 2006. Revenues from continuing operations were $40.2 billion, up 6%, increasing 8% organically.
“Infrastructure and Commercial Finance had strong quarters, and combined with the continued turnaround at NBC Universal, we delivered another quarter of double-digit EPS growth,” GE Chairman and CEO Jeff Immelt said. “Demand for global infrastructure in our Energy, Aviation and Oil & Gas businesses helped Infrastructure deliver 28% segment profit growth, while asset and earnings growth in Capital Solutions and Real Estate led to 21% segment profit growth at Commercial Finance. Our global growth was strong with developing markets revenues of $7 billion and total global revenues of $19.6 billion, increasing 14% and 9%, respectively.
“We delivered our ninth straight quarter of organic revenue growth of 2-3 times global GDP. Specifically, services revenues grew 10% and our Imagination Breakthrough programs contributed $5 billion of revenue - all driven by our growth initiative,” Immelt said.
Total orders for the company were up 3%, reflecting comparable first quarter 2006 orders that were particularly robust. Major equipment backlog grew to $37 billion, up 32% year-over-year, and increasing $5 billion from year-end 2006. Major equipment orders were 50% greater than shipments in the quarter, providing highly visible future organic growth. This growing installed base is creating strong demand for the company’s services. Services orders were up 11%, and Customer Service Agreement (CSA) backlog stands at $94 billion, an increase of 9% year-over-year.
Segment profit grew 13% and segment operating profit margin increased 130 basis points to 14.4%, on track to meet the company’s goal of 100 basis points of margin expansion for the year. Improving margins are driving higher returns. ROTC grew 100 basis points to 18.1%.
“GE Money’s earnings were tempered by challenges at its U.S. mortgage business (WMC), and Healthcare had a temporary regulatory suspension on shipments of its surgical supplies that affected their performance. Both of these businesses are in great shape and should rebound during the remainder of the year,” Immelt said. “Our ability to deliver such a solid quarter with these short-term headwinds truly demonstrates the breadth, strength and diversity of our businesses.
“As communicated at the December investor meeting, we expect to generate $1-2 billion in total gains from dispositions for the year. These gains will be used primarily for restructuring actions to make our businesses more efficient and more profitable,” Immelt said.
In the first quarter, the company realized a $0.6 billion pre-tax gain from the sale of its common stock in Swiss Re. At the same time, the company incurred several significant costs, including a $0.2 billion charge for an asbestos-related legal ruling and $0.4 billion of restructuring and other charges, including $0.1 billion for Industrial, $0.1 billion for Infrastructure, and $0.1 billion for Commercial Finance and GE Money. These items affected the GE and GE Capital Services earnings contributions for the quarter. Additionally, the company’s consolidated tax rate was 17%, in line with its expectations.
First-Quarter 2007 Financial Highlights:
Earnings from continuing operations were a record $4.5 billion, up 8% from $4.2 billion in first quarter 2006. EPS from continuing operations were $.44, up 10% from last year’s $.40. GE’s Infrastructure and Commercial Finance businesses contributed strong double-digit earnings growth for the quarter.
Including the effects of discontinued operations, first-quarter net earnings were $4.5 billion ($.44 per share) in 2007 and $4.4 billion ($.42 per share) in first quarter 2006.
Continuing revenues grew 6% to a record $40.2 billion. Financial services revenues grew 16% over last year to $17.3 billion, reflecting core growth and the net effects of acquisitions. Industrial sales were $22.9 billion, an increase of 7% from first quarter 2006 excluding the net effects of dispositions and the lack of a current-year counterpart to the 2006 Olympics broadcasts, and down 1% including those effects.
Cash generated from GE’s operating activities in the first three months of 2007 totaled $7.4 billion, up 10% from $6.7 billion last year, reflecting a 14% increase in GE Capital Services’ dividends, including proceeds from sales of insurance holdings; and a 6% increase from the industrial businesses.
“We expect to continue to deliver consistent, double-digit earnings growth with expanding margins and increasing returns in 2007. As reflected by our first-quarter results, our businesses are capitalizing on the big drivers of the global economy,” Immelt said. “For the second quarter, we expect to deliver EPS from continuing operations of $.52-.54, up 8-13% over comparable 2006 earnings. For the full year 2007, we are reaffirming our guidance of EPS from continuing operations of $2.18-2.23, an increase of 10-12%.”
GE will discuss preliminary first-quarter results on a conference call and Webcast at 8:30 a.m. ET today. Call information is available at www.ge.com/investor, and related charts will be posted there prior to the call.
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GE (NYSE: GE) is Imagination at Work -- a diversified technology, media and financial services company focused on solving some of the world’s toughest problems. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and advanced materials, GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at www.ge.com.
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