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GE says profit fell, citing finance; forecast reduced

We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales.

Jeff Immelt, GE chief executive officer

General Electric Co said its first-quarter profit fell 12 percent, missing analyst estimates, because it couldn’t complete asset sales and had higher-than-expected losses at its finance businesses owing to disruptions in global capital markets. GE cut its full-year forecast.

Profit from continuing operations dropped to US$4.36 billion, or US$0.44 a share, from US$4.93 billion, or US$0.48, a year ago, Fairfield, Connecticut-based GE said yesterday in a statement, trailing the average analyst estimate of US$0.51. GE shares declined in Germany.

GE missed its own forecasts for its commercial and consumer finance units because of an inability to complete planned asset sales and higher mark-to-market losses, the company said in its statement. That cut per-share profit by US$0.05 a share, and resulted in a lowered forecast of US$2.20 a share to US$2.30 a share, down from the at least US$2.42 previously forecast.

“We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales and resulted in higher mark-to-market losses and impairments,” chief executive officer Jeff Immelt said in the statement.

The US may be near a recession because of a slump in housing prices and a tightening of credit markets. Some members of the US Federal Reserve’s rate-setting Open Market Committee said at their March 18 meeting that they saw the risk of a “prolonged and severe downturn” in the US economy, the world’s largest.

Revenue rose 8 percent to US$42.2 billion. GE gets more than half its sales from outside the US.

GE, which trails only PetroChina Co and Exxon Mobil Corp in market value, fell as much as 11 percent in early US trading. The shares rose US$0.31 to US$36.75 on Thursday in New York Stock Exchange composite trading. The stock has fallen less than 1 percent this year compared with a 7.3 percent decline in Standard & Poor’s 500 index.
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