Financial services drag GE profits down by 44 per cent
24 Jan 2009
GE announced today fourth-quarter 2008 earnings from continuing operations of $3.9 billion, or $37 per share before preferred dividend, or $36 per share attributable to common shareowners.
Results included $1.5 billion of after-tax restructuring and other charges, including increased reserves in current environment, which are above the company's original plan and the restructuring will lower costs for 2009 and beyond.
For the year, revenue was $183 billion, up 6 per cent, and earnings were $18.1 billion, down 19 per cent. This was the third highest earnings year in GE history.
"In a very tough environment, we delivered fourth quarter business results in line with expectations we provided in December," chairman and CEO Jeff Immelt said.
"We grew infrastructure and media by 3 per cent in the quarter and 10 per cent for the year. Energy infrastructure led the way in the quarter with 11 per cent segment profit growth driven by continued global demand. Technology infrastructure grew earnings by 1 per cent, led by 21 per cent growth in aviation. NBC Universal segment profits declined 6 per cent in fourth quarter as strong cable earnings were offset by declines in the local stations.
"Capital Finance earned $1 billion in the quarter and $8.6 billion for the year," Immelt said. "We had several negative impacts to earnings in the quarter including increased loss reserves, negative marks and impairments. These charges, along with global benefits, generated a tax credit that more than offset our pre-tax loss. We also originated $48 billion of new assets in the quarter at solid margins.
"We run the company to have a Triple-A credit rating, and we have significantly strengthened our liquidity position," Immelt said. "We generated $16.7 billion of industrial cash flow from operations, up 5 per cent. We ended the year with $48 billion in total cash, after paying down our commercial paper balance to $72 billion from $88 billion at the third quarter. We used $5.5 billion of our equity offering to meet our stated GE Capital debt-to-equity leverage goal of 7:1 by the end of 2008. Through today, we have been able to fund $29 billion of our $45 billion long-term debt needs for 2009.
"The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year. We believe the GE dividend provides our investors with a solid return in this uncertain time," Immelt said.
In December, Standard & Poor's Rating Services took the first step toward lowering GE's AAA credit rating due to concerns about GE Capital. GE is only one of six industrial companies that can boast a debt rating of AAA.
GE declined $1.07, or 7.9 percent, to $12.41 at 12:41 p.m. in New York Stock Exchange composite trading.
