General Electric profit falls short as GE Capital sells more assets
General Electric posted an operating profit and higher revenue in the first quarter, compared with a year earlier, but profit fell short of Wall Street's expectations as the company continued shedding financial assets.
GE technically posted a net loss of $98 million in the first quarter, up from a loss of $13.6 billion, although it recorded a profit of $210 million from continuing operations.
Earnings per share were 1 cent, missing S&P Global Market Intelligence estimates of 18 cents.
GE shares (GE) fell 1.2% in pre-market trading to $30.62 but recovered in afternoon trading to be down 0.8% at $30.75.
The company is selling off a substantial portion of its GE Capital unit as it refocuses its efforts on its industrial businesses. Contemporaneously the company is asking the U.S. government to remove the GE Capital unit's too-big-to-fail designation, which brings with it extra regulatory scrutiny and provisions.
GE Capital announced in April 2015 that it would sell about $200 billion of its assets. As of late March it had already reached agreements to sell $161 billion, of which $138 billion in deals have been closed. The moves include an exit from consumer lending and leveraged lending, as well as substantial reductions in real estate debt and equity holdings and commercial paper.
First-quarter industrial operating profit fell 7% to $3.3 billion, while GE Capital recorded a $1.2 billion loss, including $308 million from discontinued operations.
Gains in the utility and renewables equipment category and aviation industry helped offset a sharp deterioration in GE's oil and gas business, which is being rocked by low oil prices.
Total revenue rose 6% to $27.8 billion, powered partially by a 13% rise in the power division to $5.2 billion and a 10% rise in the aviation segment to $6.3 billion.
The oil and gas business suffered an 18% blow to revenue with $3.3 billion, as the division's profit fell 37% to $308 million.
The company's industrial operating gross profit margin stayed steady at 26.2%.
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