For the first time in seven years, General Electric Co. generated earnings growth across all five of its major industrial units for the third quarter, though company-wide orders for future delivery sagged 5 percent from their level a year ago.
GE is based in Fairfield and has its GE Capital operations centered in Norwalk, with more than 4,000 employees locally.
In the third quarter, overall earnings increased 7 percent to $3.5 billion as revenue rose 3 percent to $36.3 billion, and CEO Jeff Immelt said GE is on track for 3 percent growth this year, with uncertainties remaining for 2013.
“I think most people are assuming the ”˜fiscal cliff”™ gets resolved in some way,” Immelt said in a conference call Friday, Oct. 19. “Europe”™s going to be a grind. We”™re not assuming that Europe gets any better, so I think we”™re looking at ”˜13 looking like ”˜12.”
CFO Keith Sherin said the $7 billion in debt GE set about raising this month was partially driven by the “fiscal cliff” of federal tax increases and spending cuts scheduled to kick in next year under current U.S. law, with GE having $5 billion in debt maturing next February.
“We decided to get that out of the way,” Sherin said. “We didn”™t want to do it in a disruptive environment.”
At GE Capital, earnings were up 11 percent in the quarter to $1.7 billion, with revenue dropping 5 percent to $11.4 billion. From an $82 million loss a year ago, GE Real Estate contributed $217 million in profits, more than offsetting a 17 percent drop in earnings from GE Capital”™s commercial lending unit. During the quarter, GE Real Estate sold 165 properties for $1.7 billion.
GE Capital”™s asset base is $27 billion lower from a year ago, to $425 billion.
GE Energy Infrastructure was the lone unit to post a double-digit increase in sales at 12 percent, despite a decrease in wind turbine orders. GE is in the process of breaking GE Energy into three separate divisions focused on power and water, oil and gas, and energy management systems.
Immelt said GE is expecting a 40 percent decline in wind orders next year, after sales spiked earlier this year. On the plus side, GE rang up $1.2 billion in commitments for its new FlexEfficiency 60 power plant; and $1.1 billion for what GE says is the world”™s largest subsea wellhead production contract with Petrobras.
GE Transportation revenue also gained steam, rising 9 percent as GE won a contract to supply 110 Evolution Series locomotives to a Kazakhstan company. During the quarter, GE manufactured its 5,000th Evolution Series locomotive for delivery to Union Pacific Railroad, with the locomotive reducing emissions more than 40 percent from earlier GE models.
GE Healthcare and GE Aviation saw sales drop slightly from a year ago. During the quarter, GE Aviation shipped 25 GEnx engines, while also launching an investigation into multiple failures in the new engine, which Boeing Co. chose to power its new Boeing 787 Dreamliner.
