General Electric Co beat analysts' profit forecasts in the third quarter, but revenue growth remained sluggish, prompting the company to scale back expectations for full-year revenue and profit on Friday, sending its shares sharply lower.
The industrial giant’s adjusted profit jumped 10 per cent to 32 cents a share, exceeding the 30 cents that analysts had estimated on average, according to Thomson Reuters I/B/E/S.
GE raised its full-year target for cash returned to shareholders to $30 billion (€27.6 billion) from $26 billion and noted it had returned $25 billion in the first three quarters. But slow economic growth, particularly in the oil and gas business, weighed on revenue. Organic revenue, which excludes growth from acquisitions, grew 1 per cent in the quarter.
The company's shares were the biggest decliner on the Dow Jones Industrial Average index, falling 2 per cent to $28.48 in early trading on the New York Stock Exchange.
Slump
Analysts had been looking for GE to report stronger revenue growth after a weak first half, but that was stymied by a 25 per cent slump in oil and gas revenue in the quarter.
Investors were sceptical that GE’s organic revenue growth could hit 5 per cent in the fourth quarter, Sanford C Bernstein analyst Steven Winoker wrote in a note.
Anaemic third-quarter growth “again calls into question the company’s ability to hit the 5 per cent” target, he said.
Company officials were more sanguine. Cost cutting in oil and gas and other businesses and a diminishing drag from foreign exchange translation should allow GE to deliver $2 a share in adjusted earnings in 2018, chief executive Jeff Immelt said on a conference call. – (Reuters)
