Costs and charges associated with selling its financial business pushed GE to the first-quarter loss
NEW YORK—The industrial heart of General Electric, the company’s new focus, posted lower revenue and earnings in the first quarter amid an enormous overall loss resulting from its recently-announced sale of most of the assets in its finance subsidiary.
Net income from the part of GE that the company will retain after the sale fell 5 per cent to $3.1 billion, the company said Friday. Adjusted earnings per share fell 6 per cent to 31 cents, a penny better than analysts polled by Zacks Investment Research expected, on average.
Revenue fell 12 per cent to $29.4 billion, below the $34.4 billion analysts expected.
GE CEO Jeff Immelt said in a statement that the global economic environment remained “volatile” but that investments in large infrastructure projects being made around the world provided opportunities for growth.
GE announced last week it would sell most of the assets in its GE Capital subsidiary, the latest and most dramatic move by the company to transform itself into a more focused industrial conglomerate that makes large, complicated equipment for other businesses.
“This is the plan for the future of GE as a fast-growth, high-tech industrial company,” Immelt said in a statement Friday.
Costs and charges associated with the sale totalling $14.1 billion pushed the company to an overall loss of $13.57 billion in the quarter, down from a profit of $3 billion during last year’s first quarter. On a per-share basis, the company lost $1.35.
The company’s industrial segments posted a mixed performance.
The slump in global oil and gas prices reduced revenue at the company’s oil and gas division by 8 per cent, while profit fell 3 per cent. Profit also declined in the company’s power and water division, which makes power generators and equipment, along with water treatment equipment.
Revenue fell slightly in the company’s large aviation division, which builds aircraft engines, but profit surged 18 per cent. Revenue at in the transportation division, which makes locomotives, rose 7 per cent while profit increased 11 per cent.
GE shares slipped 18 cents to $27.10 in trading two hours before the market opened. GE shares have risen 8 per cent since the beginning of the year, while the Standard & Poor’s 500 index has risen 2 per cent.