Business

General Electric profits on industrial demand rebound

  • 18 January 2013
  • From the section Business
General Electric logo on the side of a plane jet engine
General Electric's jet engines business saw its revenues grow 22% from last year

General Electric has seen a 9% jump in profits as demand for the giant US conglomerate's industrial equipment from developing countries surged.

Net earnings in the last three months of 2012 rose to $4.15bn (£2.6bn), as sales rose at all seven of the firm's industrial businesses.

The firm's backlog of orders hit a record high of $210bn in December.

Revenue growth was particularly strong at its units selling jet engines, up 22%, and oil and gas equipment, up 14%.

Total revenues rose 4% to $39.3bn, but GE's profits - which were considerably stronger than market analysts had been expected - were also helped by fatter margins on the equipment the firm sold.

GE's aviation and transport businesses also saw double-digit revenue growth, as the firm benefited from strong demand in China and in the major oil producing countries, offsetting weakness in Europe and in its home US market.

Change in strategy

"We saw real strength in the emerging markets, and the developed regions stabilised," said chief executive Jeff Immelt.

The industrial giant also produces medical equipment, train locomotives, wind turbines and refrigerators among other things.

Profits at its financial wing, General Electric Capital Corp (GECC), rose a healthy 4% from a year ago.

The results appeared to vindicate Mr Immelt's strategy of moving the conglomerate's focus away from GECC - which came to dominate the firm during the financial bubble of the last decade - back towards its more traditional manufacturing business lines.

GECC contributes 30% of the group's revenues, and 37% of its profits.

"A lot of what they've been talking about is coming to fruition," said analyst Daniel Holland at research firm Morningstar. "And it's pretty broad-based across the portfolio."

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