General Electric (GE) Chairman and CEO Jeff Immelt provided Tuesday (Dec. 16), an operational update at the company’s annual outlook meeting in New York.
Mr. Immelt acknowledged in his remarks the current fiscal year as a very challenging one for the global economy and GE’s many businesses. After reconfirming the co.’s Dec. 2, forth quarter EPS outlook of $0.50-0.52, and full-year ’08 EPS of $1.78-1.84 from $185 billion trailing twelve in revenue — GE’s chief announced that the conglomerate would eliminate quarterly EPS guidance but will provide full year operating framework with detail in the industrial and financial businesses.
Mr. Immelt also announced lower profit projections for the co.’s industrial businesses, including jet engines, power turbines and medical equipment, but said the units should still be profitable despite the global economic contraction.
GE had to cut its earnings forecast twice this year. A factor that has contributed to a 52% decline in its shares in ’08.
Immelt also noted that GE, despite an intensification of the financial crisis, has remained focused in terms of its profitability as a company, and is aggressively reducing costs and improving cash generation. While fiscal ’09 will be business-wise a challenging year for GE, the company, said Immelt – “has set forth a framework of industrial businesses’ earnings growth of 0-5%”. GE plans its financial services businesses to earn approximately $5 billion in 2009.
GE also expects its major equipment and services backlog to remain strong in ’09 as the co. expands its industrial margins, which already compares favorably to other competitors. GE announced Tuesday it won a contract worth $3 billion to supply gas turbines in Iraq which will support the reconstruction of the country’s power generating capability.
Immelt also said GE remains focused on paying investors a dividend. The conglomerate’s board of directors declared on Dec. 16 a quarterly dividend of $0.31 per outstanding share, for a full-year total dividend of $1.24 in ’09, consistent with the ’08 dividend payment.
Immelt’s aim is that of returning GE to 10% earnings growth. The company however, will miss that target this year.
“We have multiple drivers of growth in a downturn, including services, infrastructure and strong margins,” Immelt said. “We are committed to our strategy of growing globally, driving innovation, developing partnerships and using our scale. We are confident that as the economy recovers, GE will return to its historical earnings growth rate.”
GE shares closed at $17.39 in NYSE trading Wednesday, down $0.53 (2.96%).