General Electric said on Friday that its profits for the fourth quarter had matched its reduced forecast in November and reaffirmed its profit outlook for the first quarter and all of this year.
GE, one of the world's biggest manufacturing and financial services companies, said that it saw little evidence of a strong economic recovery. On a conference call with investors, its executives said that the company continued to have problems raising prices because of overcapacity in many of its markets.
GE earned US$14.1 billion last year, or US$1.41 a share, on sales of US$131.7 billion, up from US$125.9 billion in 2001. Excluding a one-time noncash charge of 10 cents a share for a write-down of good will, it made US$15.1 billion, or US$1.51 a share, compared with US$1.37 a share in 2001.
While the company's results included an array of one-time gains and charges, the overall picture was mixed. Five of its 12 major business segments showed profit gains, five showed declines, and two were basically flat. GE's results were also helped by a lower tax rate and a US$514 million one-time profit from trading its stake in Cablevision for the Bravo cable network.
The company's results were broadly in line with expectations, analysts said. After falling as much as 3.5 percent in midday trading, GE shares closed at US$24.88, down just US$0.15, or 0.6 percent, on a day when the Standard & Poor's 500 index of big stocks fell 1.4 percent.
From its peak of about $60 a share in August 2000, GE has fallen 60 percent, as its profit growth slows and some analysts question the quality of earnings at its giant GE Capital financial services division. A slump in the electricity industry has also slowed orders for GE's power turbines, one of the company's most profitable products.
General Electric's size, at 310,000 employees, and diversity make it an important economic barometer. It is a leading maker of electric turbines, jet engines, medical imaging equipment and appliances, and owns NBC. Its GE Capital unit is the fourth-largest financial services company in the US.
Last year, General Electric expects to have profits of US$1.55 to US$1.70 a share, compared with US$1.51 last year, which excluded the US$0.10 noncash write-off of good will. But while it excludes the goodwill write-off, the 2002 figure includes a US$0.14 charge related to losses at General Electric's insurance unit. Excluding that charge, GE would have posted a profit of US$1.65 a share last year, as much as US$0.10 a share more than the profit it is forecasting this year.
In the first quarter of 2003, GE expects earnings to fall 5 to 10 percent from the profit of US$3.5 billion, or US$0.35 a share, that it reported in the year-earlier period. That estimate is unchanged from its November forecast.
In a conference call on Friday morning, General Electric executives said they saw little evidence of a broad economic recovery. Consumer demand in the US has slowed, with GE's appliance and lighting business flat in the fourth quarter. Europe appears slightly stronger than Asia, they said.
Overall, many industries have excess capacity, and price competition remains fierce, forcing GE to lower the prices of many of its products, said Jeffrey R. Immelt, the company's chairman. Last year, GE cut its prices an average of 1.4 percent, said Keith Sherin, its chief financial officer.
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