GE slump continues with earnings

General Electric reported quarterly results on Wednesday that illustrated how far it has fallen, and the steep hill the company — once a titan of American industry — must climb to turn itself around.

There were no big surprises; those came earlier.

Last week, GE made a startling announcement that it would take a $6.2 billion charge in the fourth quarter, and set aside $15 billion over seven years to pay for obligations held by its finance unit, mainly on long-term care policies.

And last fall, shortly after taking over as chief executive, John Flannery told investors that GE’s big electricity-generation division had badly misjudged the market and produced too many power turbines, warning that it would take a year or more to fix the business.

At the time, GE sharply reduced its earnings forecast and cut its dividend by half, only its second payout cut since the Great Depression.

In a statement on Wednesday, Flannery acknowledged the challenges ahead. But he also pointed to a bright spot — cash flow from industrial operations, while down, was higher than expected. That, he said, was a sign of “some of the early progress” from his cost-cutting steps.

Overall, GE reported a net loss of $9.8 billion for the last three months of the year. That included the big charge for insurance obligations and a separate $3.5 billion charge related to tax reform in the U.S.

The company’s operating earnings per share fell 41 per cent to 27 cents a share, below the average estimate of analysts polled by Thomson Reuters. Revenue last year declined by five per cent, to $31.4 billion, well below most analysts’ forecasts.

Sales in GE’s power unit in particular fell by 15 per cent, to $9.4 billion in the quarter. Last month, the company announced it would eliminate 12,000 jobs in that struggling business.

Still, the company’s aviation unit, a leading manufacturer of jet engines, and its health care business, which spans life sciences and medical-imaging equipment, delivered strong profits.