Capital Real Estate turned its first profit since the economic panic of 2008, as its parent GE Capital exceeded first-quarter expectations amid overall growth at General Electric Co.
Fairfield-based GE and Norwalk-based GE Capital have among Fairfield County”™s largest workforces at just more than 4,000 employees, according to totals the companies reported in March to the Fairfield County Business Journal.
GE revenue totaled $35.2 billion, down 8 percent from the first quarter of 2011 due to its divestment of NBC Universal to Comcast Corp. in January that year. The loss of NBC Universal profits resulted in GE earnings rising just 1 percent from last year.
Similarly, last year”™s sale of Garanti Bank, Turkey”™s second largest bank, had a big impact on results for Norwalk-based GE Capital. Excluding Garanti, however, GE Capital saw profits increase 27 percent from the first quarter of 2011.
GE scheduled its annual meeting for April 25 in Detroit after press deadline. In a conference call the previous week to review GE”™s first quarter results, CEO Jeff Immelt said the company is unlikely to seek any major new acquisition this year as it works to assimilate big deals of late.
“We may do some smaller ”˜bolt-ons,”™ but we got a lot on our plate,” Immelt said. “I really want to get all the energy acquisitions nailed ”¦ We never say never, but I just don”™t want to do a big deal this year. We”™ve got 11 percent organic growth, 20 percent orders growth ”¦ Our focus is on good execution and delivering big backlogs.”
While GE Capital saw a slight increase in delinquency rate on commercial and real estate loans, Immelt called GE Capital Real Estate”™s profit on commercial real estate “quite significant.”
“Finally, we”™re able to originate profitable new business,” Immelt said. “We”™re originating new business in excess of a 3 percent return on investment and our ongoing net income growing by 27 percent is a good sign.”
During the quarter, GE Capital took a $200 million charge as it leaves Ireland”™s mortgage market, which GE CFO Keith Sherin called “the most challenged mortgage book” that GE Capital has.
“I think we continue to see stabilization across on the financing receivables side and with loss provisions and write-off stabilization across almost all the portfolios of GE Capital,” Sherin said. “I would expect you”™re going to continue to see a little bit of a decline as we work our way through the write-offs for existing provided losses, but the new provisions that we”™re laying on today are representative of pretty good run rate, I would say, a very healthy run rate based on a good backdrop. The main change that we”™ve seen is the decline in the marks and the write-offs in the equity book in (GE) Real Estate, specifically, so the run rates for new provisions for financing receivables are pretty good rates and at historically low levels.”
Editor”™s note: The reporter holds shares of GE.
