Sep 28, 2012

GE CEO Jeff Immelt Provides Rosy Sales, Earnings Outlook For 2012, 2013

(RTTNews.com) – Industrial conglomerate General Electric Co. (GE) said Thursday that it expects total profit margins for 2012 to grow by up to 50 basis points, and total revenues to advance about 5 percent from last year.

The company’s Chief Executive Officer Jeff Immelt revealed this while speaking during a presentation at the 2012 Infrastructure Investor Meeting in New York earlier in the day.

The Fairfield, Connecticut-based company said it currently expects 2012 profit margins to be up by up to 50 basis points to 15.4 percent, up by about 70 basis points by the first half of 2013 and sees a two-year margin improvement of up to 100 basis points to 15.9 percent by 2013 end.

GE also projects total operating earnings to grow in the double digit percentages in 2012 and also 2013.

Further, the company now expects 2012 industrial unit organic growth of about 10 percent, at the top end of its earlier growth forecast of 5 to 10 percent provided in July. It also anticipates growth in industrial unit profit margin in 2012 and 2013.

The company has a capital allocation of $100 billion until the first half of 2016 to create share holder value. The company intends to use the funds as organic investment in industrial profit growth, and for merger and acquisition deals between $1 billion and $3 billion with focus on infrastructure adjacencies.

The company also said it will reduce the size of GE Capital by looking to pull out of consumer finance and cutting its real estate holdings, and diversify funding.

It will use the special GE Capital dividends of $4.5 billion to reduce shares by repurchasing GE shares to bring it below 10 billion shares, down from the current 10.56 billion shares. This will bring back the shares to the level in 2008, when it issued new shares to raise funds during the financial crisis.

Additionally, the company said it targets cost reductions of up to $2 billion through 2014 without impacting growth engine, primarily by reducing layers and trimming Europe footprint. The cost savings are projected to reach between $700 million and $1 billion in the first half of 2013 and between $1 billion and $1.3 billion by the first half of 2014.

In the third quarter, the company sees the substantial gain from the sale of its majority stake in NBC Universal in early 2011 to fund the major portion of its restructuring.

GE closed Thursday’s regular trading session at $22.73, up $0.63 or 2.85% on a volume of 67.31 million shares.