GE tops profit estimates as power gains counter sluggish economy

NEW YORK: General Electric Co reported second-quarter profit that beat analysts’ estimates as surging sales in energy units helped the industrial giant counter the impact of a sluggish economy.

Adjusted earnings rose to 51 cents a share, boosted by higher profits in the power and renewable energy divisions, GE said in a statement. That exceeded the 46-cent average of analysts’ estimates compiled by Bloomberg. Sales of $33.3 billion compared with $31.9 billion expected by analysts.

“The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow-growth economy,” Chief Executive Officer Jeffrey Immelt said in the statement. “We expect strong organic growth in the second half of the year.” GE is betting on markets such as energy and aviation to help it overcome economic malaise and global uncertainty highlighted by the UK vote to leave the European Union. Immelt has sold finance and consumer-focused operations while investing in equipment manufacturing and building a complementary software business.

GE fell less than 1 per cent to $32.39 at 7:26 am in New York before regular trading. The shares rose 4.6 per cent this year through Thursday, compared with a 5.9 per cent increase for the Standard & Poor’s 500 Index.

Total sales rose 15 per cent, including a 31 per cent increase in GE Power and a 28 per cent advance in the renewable-energy unit. Those divisions expanded significantly in the past year after the company closed its $10 billion acquisition of Alstom SA’s energy business. Revenue fell 22 per cent in the Oil & Gas operation as the company navigated the enduring slump in the global crude market.

The earnings included a gain of 20 cents a share after GE closed the sale of its appliances unit during the quarter. That was partially offset by 9 cents a share of restructuring charges and other items.

Orders in GE’s digital unit rose 15 per cent and revenue increased 17 per cent. The company held an investor meeting during the quarter to highlight its rapidly expanding software operations, which GE sees as a complementary business that can enhance the value and productivity of industrial equipment.

The company wants to bolster its image in technology circles and boost its ability to recruit software engineers by relocating its headquarters to Boston from a longtime suburban home in Fairfield, Connecticut. The move, announced earlier this year, is slated for next month.

GE will relocate with a substantially smaller finance unit, after announcing $181 billion in lending-asset sales from early last year through the second quarter. The company, which plans to retain only the portions of GE Capital, received approval from regulators last month to drop its designation as a too-big-to-fail financial firm.