GE Renews Investments in Energy, Industrial Businesses After Successful Third-Quarter 2014, Turns to Pharmaceuticals

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Researched by Industrial Info Resources (Sugar Land, Texas)--Power and manufacturing leader General Electric Company (NYSE:GE) (GE) (Fairfield, Connecticut) began to shift focus in third-quarter 2014, as strong results from the power & water, locomotive and aviation markets, as well as a record backlog for projects, illustrated why the company plans to pull in a larger share of its revenues from its industrial businesses. Net earnings were reported to be $3.54 billion, a 10.84% increase from third-quarter 2013.

Industrial Info is tracking about $13 billion in active projects involving GE, including the construction of two combined-cycle power plants owned by Met Group (Istanbul, Turkey) in Turkey: the $1.5 billion Dervish integrated renewables power plant in Ayranci, and the $900 million natural gas-fired power plant in Babaeski. GE is serving as the turn-key contractor on both projects, which are expected to be completed in the first quarter and last quarter of 2017, respectively.

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Total revenues stood at $36.17 billion, a 1.44% increase from the same period last year. Among the company's industrial segments, Power & Water showed particular strength, with equipment orders up 8%, driven largely by a 42% jump in orders for renewables equipment; locomotive shipments also saw significant gains, as did aviation commercial engine volumes and commercial spares shipments. Companywide, orders increased 22%, with only one segment, Energy Management, reporting a decline.

GE is shifting its focus to its industrial businesses, through which is hopes to achieve 75% of its earnings by 2016, with its $17 billion plan to acquire the energy-related assets of Alstom S.A. (Levallois-Perret, France) and several major divestments. These include the recent initial public offering of Synchrony Financial, GE's North American retail finance business, which it expects to divest completely in late 2015, and the recent agreement to sell the Electrolux appliances business for $3.3 billion.

GE's backlog for equipment and services now stands at a record $250 billion, driven by a 31% increase in orders for new technology, including large orders for Tier-4 compliant locomotives and the upcoming GE9X aircraft engine.

"With service orders growing 10% and strong margin expansion, we're seeing some of the early signs that our investments in analytics are paying off," said Jeff Immelt, the chairman and chief executive officer of GE, in a conference call.

GE also expects to up its investments in the biopharmaceutical manufacturing industry, which is growing 8% annually. Industrial Info is tracking progress at six U.S. pharmaceutical manufacturing facilities owned by GE.

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"Over the past six years, biological medicine sales have grown at a 10% per annum to $170 billion, due primarily to expansion of antibodies for the treatment of cancer and increasing demand for products like insulin," said Kieran Murphy, the leader of GE's global life sciences business, in the conference call. "Our hardware and consumables are embedded in the FDA-approved manufacturing processes of these products."

He added, "This is an $8 billion market where we have built a leading position."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three 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.