GE Rises After Boosting Industrial Revenue Forecast
Revenue at GE’s industrial businesses will rise about 10 percent this year, topping the previous forecast for a gain of 5 percent to 10 percent, according to a presentation today from the Fairfield, Connecticut-based company. The shares jumped 2.9 percent to $22.73 at the close in New York.
“We like the industrial portfolio and think it’s going to deliver double-digit growth,” Chief Executive Officer Jeffrey Immelt said at a meeting with analysts and investors in Ossining, New York.
Sales in excess of GE’s forecast would be a bright spot among U.S. industrial stocks. Analysts pared profit estimates for industrial companies in the Standard & Poor’s 500 Index by 1.05 percent for this quarter and by 0.9 percent for the last three months of 2012, according to data compiled by Bloomberg. Both results trailed the average for the index, the data showed.
Earnings per share will experience “double-digit growth” this year and in 2013, Immelt said, without giving a figure. Analysts project an adjusted profit of $1.54 a share in 2012 and $1.74 next year, based on estimates compiled by Bloomberg.
Immelt said his focus for acquisitions will be on targets in the $1 billion to $3 billion range. While GE signaled interest this week in mining-equipment and service suppliers as part of a new unit focused on the industry, Immelt said today that investors should oppose a big underground mining deal.
His comment seemed to rule out interest in Joy Global Inc. (JOY), a company that stirred speculation among analysts and investors as a takeover candidate after the creation of the GE Mining division. Milwaukee-based Joy climbed 1.7 percent to $57.35.
GE’s advance extended its gain for the year to 27 percent, outpacing the 15 percent advance for the Standard & Poor’s 500 Index. Today’s increase was the most since Sept. 6, and marked the highest closing price since Oct. 1, 2008.
Industrial revenue in growth markets from Canada to Brazil to Russia will grow at a double-digit pace this year from $33 billion in 2011, according to GE, which reported getting 53 percent of 2011 sales from outside the U.S., according to data compiled by Bloomberg.
Operating profit margin growth will be 30 basis points to 50 basis points this year and 50 basis points to 70 basis points in 2013, GE said, reaffirming earlier comments. A basis point is 0.01 percentage point.
GE will have $100 billion in cash available for 2012 to 2016 from sources including internal payouts from its financial unit and cash flow from industrial businesses, the company said.
The biggest use of that cash will be for mergers and acquisitions and stock buybacks, with a goal of reducing the shares outstanding to less than 10 billion, GE said. The total was 10.6 billion shares as of July 1, according to the company’s most-recent quarterly regulatory filing.
“We’re going to be very disciplined with cash and extremely focused on creating shareholder value,” Immelt said.
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