Despite continued macroeconomic headwinds,
General Electric
(
GE
) reported strong fourth quarter 2012 results with operating
earnings of $4.7 billion or 44 cents per share compared to $4.1
billion or 39 cents in the year-ago quarter, representing a
year-over-year increase of 13%.
This was the eleventh consecutive quarter in which the company
witnessed double-digit growth in operating earnings. The
operating earnings for the reported quarter were marginally above
the Zacks Consensus Estimate of 43 cents.
On a GAAP basis, the company reported quarterly earnings of $4.3
billion or 41 cents per share from continuing operations compared
to $4.0 billion or 37 cents in fourth quarter 2011. For full year
2012, operating earnings were $16.1 billion or $1.52 per share
compared to $14.9 billion or $1.31 in the prior year. GAAP
earnings for 2012 were $14.7 billion or $1.39 per share from
continuing operations compared to $14.2 billion or $1.24 in 2011.
Revenues
Revenues for the quarter came in at $39.3 billion for the
quarter, reflecting a 4% rise year over year. While industrial
segment revenue grew 4%, GE Capital revenue surged 2% year over
year. Strong performance of the Industrial portfolio was driven
by solid contributions from the Oil & Gas and Aviation
segments, partially offset by Transportation segment. Revenues
for the reported quarter exceeded the Zacks Consensus Estimate of
$38.4 billion.
For full year 2012, revenues were relatively flat compared to the
previous year at $147.4 billion. While industrial segment revenue
grew 8%, GE Capital revenue dipped 6% year over year. Strong
performance of the Industrial portfolio during the year was
driven by solid contributions from all the segments, particularly
Energy Management and Transportation. Revenues for full year 2012
exceeded the Zacks Consensus Estimate of $147.0 billion.
Infrastructure orders for the reported quarter increased 2% year
over year to $28.5 billion, with ratio of equipment orders
received to orders billed (book-to-bill) being 1.2. Total backlog
of equipment and services at quarter-end reached a record level
of $210 billion. During fourth quarter 2012, General Electric
received orders from
Petrobras Argentina SA
(
PZE
) for $0.4 billion of turbomachinery.
The company also penned a $0.2 billion contract to supply
sub-sea production equipment to the Lianzi project of
Chevron Corporation
(
CVX
) and $0.4 billion worth of wind turbines to Renova Energia in
Brazil. In addition, CFM International procured an agreement from
Alaska Airlines for 50 new Boeing 737 aircraft engines. CFM
International is a 50-50 joint venture between Snecma S.A., a
French multinational aircraft manufacturer and subsidiary of
Safran SA
(
SAFRY
), and GE Aviation Systems.
The company witnessed strong revenue growth during the year from
Russia, Latin America, Australia/New Zealand, China, Sub-Saharan
Africa and ASEAN countries. At the same time, the company
launched new products like FlexEfficiency™ 60, a new power plant
technology with turbines; and the Tier 4 Evolution® Series,
reportedly the most fuel-efficient freight locomotive in its
history.
Revenue by Segment
General Electric reorganized its Energy Infrastructure segment
into three separate segments effective Oct 1, 2012, namely -
Power & Water, Oil & Gas, and Energy Management.
Consequently, the company presently has eight operating segments:
Power & Water, Oil & Gas, Energy Management, Aviation,
Healthcare, Transportation, Home & Business Solutions, and GE
Capital.
During the reported quarter, Oil & Gas and Aviation recorded
the highest revenue growth year over year at 11% each, followed
by Power & Water, Home & Business Solutions, and GE
Capital at 2% each. However, Transportation and Energy Management
segments posted a revenue decline of 7% and 1% respectively for
the quarter.
For full year 2012, the trend was slightly different with all
segments, except GE Capital reporting revenue growth.
Transportation and Energy Management segments posted a revenue
increase of 15% each for the year, followed by Oil & Gas
(12%), Power & Water (10%), Aviation (6%), Home &
Business Solutions (4%), and Healthcare (1%). GE Capital revenue
dipped 6% year over year
Margins, Balance Sheet and Cash Flow
Total operating income for the reported quarter grew 11% year
over as all the segments recorded healthy profits, the notable
among them being Energy Management (36%), Aviation (22%) and Oil
& Gas (14%). Total operating income for full year 2012 surged
11% year over as all the segments recorded solid profits, the
most impressive among them being Energy Management (68%),
Transportation (36%), and Home & Business Solutions (31%).
Cash generated from operating activities for full year 2012 was
$17.8 billion, up 48% from the prior-year period. Cash and cash
equivalents were $77 billion at year-end 2012. The company
repurchased $2.1 billion worth of stock during the reported
quarter, bringing its tally for the year to $5.2 billion. During
2012, General Electric returned $12.4 billion to investors
through dividend payouts and buybacks. The company also raised
its quarterly dividend by 12% to 19 cents per share, the fifth
such increase in three years.
Outlook
With a healthy growth in both the top- and bottom-line, solid
operating margins, and strong order backlogs, General Electric
expects to continue its bull run in 2013 and simultaneously
benefit the shareholders with increased dividend payouts. We also
remain encouraged by the growth momentum and maintain our Neutral
recommendation on the stock, which currently has Zacks Rank #4
(Sell).
CHEVRON CORP (CVX): Free Stock Analysis
Report
GENL ELECTRIC (GE): Free Stock Analysis
Report
PETROBRAS EGY (PZE): Free Stock Analysis
Report
(SAFRY): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment
Research