GE profits rise but margins suffer

Emerging markets have helped US industrial and finance conglomerate General Electric match forecasts for its quarterly profits, but it failed to beat expectations as its margins shrank.

GE, the world's biggest maker of jet engines and electric turbines, said operating profits rose 11 per cent to $3.4bn (£2.2bn), while operating earnings per share of $0.31 matched analysts’ forecasts.

But net earnings were down 14 per cent compared with 2010 at $0.24 per share, as GE included an eight-cent-per-share charge to buy back the preferred shares the company had sold to Warren Buffett's Berkshire Hathaway in the financial crisis.

Revenue was little changed at $35.4bn, above the $34.9bn analysts had forecast.

Chief executive Jeff Immelt said the group was in a strong financial position.

“We continue to successfully navigate a volatile global economy,” he said.

“Our investment in research and development and global expansion is paying off with robust organic growth. Our liquidity is strong. GE Capital is safe and secure, with increasing competitive advantage.”

He added that GE expected to achieve “double-digit operating EPS growth in 2012.”

GE’s finance division GE Capital saw a 79 per cent increase in net profit, to $1.5bn, compared with the same quarter in 2010, as revenues rose 15 per cent to $43bn.

But its giant energy infrastructure division remained weak, with profits down nine per cent to $1.5bn despite revenues rising by 30 per cent to $10.9bn. GE said the decline was due to pricing pressure on wind turbines, and said it will resume profit growth in the division from next year.

Its industrial equipment division saw orders grow by 16 per cent year-on-year, a good indicator of future revenues, while international sales jumped by a quarter.

GE has been counting on strong demand in rapidly developing economies to offset weak U.S. and European demand.

But its shares fell one per cent in trading despite a 1.7 per cent rise in the S&P 500 index.