Strong dollar buffets GE amid restructure

A strong dollar weighed on General Electric's revenues and earnings in its first earnings announcement since revealing its radical plan to shed most of its financial services operations.

But it reported healthy profit growth from the industrial businesses on which it has staked its future.

The strength of the dollar cut nearly $1bn from GE's industrial revenues, which would have risen 3 per cent if not for currency effects but came in 1 per cent lower at $24.4bn for the first quarter of 2015.

However, earnings from the industrial businesses - which manufacture and service products including aircraft engines, power generation equipment and X-ray machines - rose 9 per cent to $3.56bn despite a $120m currency headwind.

A $14.1bn charge for the costs of the planned exit from financial services led the group to report a $13.6bn post-tax loss for the first quarter.

Excluding those exit costs, underlying operating earnings per share from continuing operations were down 10 per cent at 27 cents for the first quarter, the company said.

The industrial divisions bucked the trend, reporting operating earnings per share up 14 per cent to 16 cents.

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Once the planned disposals of the financial services businesses are completed, which is scheduled to be in 2018, GE plans to earn about 90 per cent of its earnings from its industrial operations, compared to 53 per cent in 2013.

The weakest first-quarter performance among the industrial businesses came from the division providing equipment and services for the oil and gas industry, which has been built up by acquisition in recent years. Hit by the plunge in oil prices since last summer, its profits fell 3 per cent to $432m.

However, excluding exchange rate effects and the impact of acquisitions and disposals, profits from oil and gas were up 11 per cent at $496m, the company said.

The strongest performances came from appliances and lighting, where profits almost doubled to $103m, and from the division making aero engines and other aircraft components, where profits were up 18 per cent at $1.31bn.

Mr Immelt argued last year that the fall in oil prices was demonstrating the strength of GE's ownership of a wide range of businesses, because while it hurt the oil and gas services division lower fuel costs were helping the aviation business.

The reported performance of GE Capital, the financial services division, was complicated by the partial spin-off last year of Synchrony Financial, the North American retail credit business, and by the costs of the planned exit from the business.

Excluding those exit costs, the company said, GE Capital's profits were down 21 per cent at $1.52bn.

After surging 11 per cent to hit a high of $28.68 when the disposals were announced earlier this month, GE shares were just 0.2 per cent higher at $27.35 by Friday lunchtime.

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