General Electric Co (GE) reported weaker-than-expected third-quarter revenue, hurt by unfavorable exchange rates, and set a cautious tone for next year, saying it expects the tough economic environment to continue.
The largest US conglomerate on Friday reported a 2.8 percent rise in sales, with revenue down at its aviation and healthcare arms, while the stronger US dollar crimped overall results by diminishing the value of its foreign sales.
GE, which is also the world’s biggest maker of electric turbines and jet engines, stood by its forecast for full-year earnings to rise at a double-digit percentage rate. It said full-year sales would be up just 3 percent, down from a prior 5 percent growth forecast, reflecting continued efforts to cut back the GE Capital finance arm and exchange rate fluctuations.
The company, which reported an 8 percent rise in third-quarter earnings, is not counting on any significant improvement in the world economy next year.
“We’re not assuming that Europe gets any better,” chief executive officer Jeff Immelt told investors on a conference call. “We’re looking at 2013 being kind of like 2012, with the big variable being the fiscal cliff.”
The fiscal cliff refers to US$600 billion in spending cuts and tax increases that could take effect at the end of the year if US lawmakers fail to reach an accord on shrinking the federal deficit.
“We’re making the same assessment most people do, that somehow it gets resolved,” Immelt said.
The Fairfield, Connecticut-based company was not alone in taking a guarded view of next year.
Fellow manufacturer Honeywell International Inc, which also reported revenue below analysts’ expectations, said it expects revenue to grow at a low-single-digit rate next year, excluding the effects of acquisitions and currency fluctuations.
Third-quarter net income increased to US$3.49 billion, or US$0.33 per share, from US$3.22 billion, or US$0.22 per share, a year earlier.
Factoring out one-time items, the profit was US$0.36 per share, meeting the analysts’ average estimate, according to reports.
Revenue rose to US$36.35 billion from US$35.36 billion. Wall Street expected US$36.94 billion.