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Released April 20, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Power and manufacturing leader General Electric Company (NYSE:GE) (GE) (Fairfield, Connecticut) saw its strong operational performance overshadowed in first-quarter 2015, as $16 billion in expenses associated with the departure of GE Capital, the company's financing arm, more than offset solid growth in its industrial businesses. Not surprisingly, GE is now eying its industrial segments for 90% of its overall business by 2018. The company reported a net loss of $13.57 billion for the quarter, compared with earnings of $3 billion in first-quarter 2014.
Industrial Info is tracking about $9.6 billion in projects involving GE, including Akuo Energy's (Paris, France) $190 million construction of a windfarm near Rocksprings, Texas. The 100-megawatt project, on which GE is serving as a technology provider, will consist of 56 GE wind turbine generators, each with a capacity of 1.7 MW. The project is expected to kick off in the third quarter.
Total revenues were reported to be $29.36 billion, a 12.5% decrease from the same period last year, affected largely by a 39% revenue decline at GE Capital and the strengthening U.S. dollar. (Most of the company's business is overseas.) GE also pointed to slow economic growth and a volatile market environment, but benefited from sales of aviation-related items, such as turbines and jet engines, and a 21% increase in transportation locomotive shipments. China, India and Latin America were among the strongest growth markets.
GE likely will need its automotive, aviation and healthcare businesses to pick up the slack from its oil-field equipment business, which is being indirectly pummeled by weak commodity prices that are causing oil companies to cut their exploration and production budgets. Earlier this month, the company announced it was selling off $26.5 billion in commercial real estate investments as part of recent efforts to aggressively cut costs.
"We saw some encouraging signs in the quarter," said Jeff Immelt, the chairman and chief executive officer of GE, in a conference call. "Aviation remains very strong, recording $800 million on LEAP [engine] orders. The LEAP has won 79% of all NEO and MAX [aircraft] orders. LEAP engines for NEO and C919 [aircraft] are flying, and the LEAP for Boeing is in the test plane and flying soon. The engine is ahead of schedule. The LEAP engine has been one of our most successful product launches in history."
GE's backlog stands at a record $263 billion, a 7% increase from first-quarter 2014. The company expects to see double-digit percentage growth in Power & Water segment orders in 2015, while orders for subsea equipment are expected to partly offset the headwinds in the oil and gas equipment business. Executives say they will continue to sell off most of GE Capital's assets over the next 24 months.
"We continue to invest in industrial growth," Immelt said. "Between research and development, investment and planned equipment and information technology and the potential for bolt-on industrial mergers and acquisitions, we will invest $10 billion to $15 billion each year in our industrial growth."
Immelt also said that GE's acquisition of Alstom S.A. (Levallois-Perret, France) likely will close in the second half of 2015.
"We always expected that this deal would get a second look in the U.S. and Europe," Immelt said. "Alstom is impacted by similar volatile market dynamics as GE, but we continue to see this as a good strategic and financial fit for us."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking about $9.6 billion in projects involving GE, including Akuo Energy's (Paris, France) $190 million construction of a windfarm near Rocksprings, Texas. The 100-megawatt project, on which GE is serving as a technology provider, will consist of 56 GE wind turbine generators, each with a capacity of 1.7 MW. The project is expected to kick off in the third quarter.
Total revenues were reported to be $29.36 billion, a 12.5% decrease from the same period last year, affected largely by a 39% revenue decline at GE Capital and the strengthening U.S. dollar. (Most of the company's business is overseas.) GE also pointed to slow economic growth and a volatile market environment, but benefited from sales of aviation-related items, such as turbines and jet engines, and a 21% increase in transportation locomotive shipments. China, India and Latin America were among the strongest growth markets.
GE likely will need its automotive, aviation and healthcare businesses to pick up the slack from its oil-field equipment business, which is being indirectly pummeled by weak commodity prices that are causing oil companies to cut their exploration and production budgets. Earlier this month, the company announced it was selling off $26.5 billion in commercial real estate investments as part of recent efforts to aggressively cut costs.
"We saw some encouraging signs in the quarter," said Jeff Immelt, the chairman and chief executive officer of GE, in a conference call. "Aviation remains very strong, recording $800 million on LEAP [engine] orders. The LEAP has won 79% of all NEO and MAX [aircraft] orders. LEAP engines for NEO and C919 [aircraft] are flying, and the LEAP for Boeing is in the test plane and flying soon. The engine is ahead of schedule. The LEAP engine has been one of our most successful product launches in history."
GE's backlog stands at a record $263 billion, a 7% increase from first-quarter 2014. The company expects to see double-digit percentage growth in Power & Water segment orders in 2015, while orders for subsea equipment are expected to partly offset the headwinds in the oil and gas equipment business. Executives say they will continue to sell off most of GE Capital's assets over the next 24 months.
"We continue to invest in industrial growth," Immelt said. "Between research and development, investment and planned equipment and information technology and the potential for bolt-on industrial mergers and acquisitions, we will invest $10 billion to $15 billion each year in our industrial growth."
Immelt also said that GE's acquisition of Alstom S.A. (Levallois-Perret, France) likely will close in the second half of 2015.
"We always expected that this deal would get a second look in the U.S. and Europe," Immelt said. "Alstom is impacted by similar volatile market dynamics as GE, but we continue to see this as a good strategic and financial fit for us."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
