FAIRFIELD, Conn.--(BUSINESS WIRE)--July 11, 2003--GE's second quarter 2003 earnings were $3.8 billion, or $.38 per share, compared with $4.4 billion, or $.44 per share, in second quarter 2002, the Company announced today.
"We delivered another quarter of broad-based performance in a tough economy, with eight of our 13 businesses achieving double-digit earnings growth while we managed through the downturn in Power Systems' sales of large gas turbines," said GE Chairman and CEO Jeff Immelt. "At the same time, we made further progress on building the foundation of our future growth.
"We introduced new products in the quarter ranging from a new version of our Lightspeed(16)(TM) CT scanner to a new intelligent clothes-care system, and we passed several technology milestones, including successful tests of our new H System(TM) gas turbine, our GE90-115B jet engine, and our GE Evolution Series(TM) locomotive. We had terrific customer wins, including NBC's successful Olympics bid and its upfront advertising sales, Wind Energy's strong stream of orders and Aircraft Engines' regional jet wins with JetBlue and US Airways. We added to our growth platforms with agreements for acquisitions in security, healthcare IT, and U.S. consumer finance, and we took major steps in transforming our portfolio with agreements to sell two of our insurance units.
"The year is turning out as planned," Immelt said. "As expected, the ramp-down of our turbine shipments in the first half created earnings pressure. However, we are executing with broad-based strength to generate significant growth in the second half. We see nine of 13 businesses growing in double digits and more favorable comparisons in Power Systems and Insurance."
GE will discuss second quarter results and, as previously announced, narrow its full-year earnings outlook within the current range of $1.55-$1.70 per share on a conference call and Webcast at 8:30 a.m. EDT today. Call information and related charts are available at www.ge.com/investor.
Second Quarter 2003 Financial Highlights
-- Earnings were $3.794 billion, or $.38 per share, down 14% compared with last year's $4.426 billion, or $.44 per share. Eight of GE's 13 businesses -- Commercial Finance, Consumer Finance, Consumer Products, Industrial Systems, Insurance, Medical Systems, NBC and Specialty Materials - achieved double-digit earnings growth during the quarter. As expected, their performance was more than offset by the impacts of the anticipated down cycle in sales of large gas turbines at Power Systems, and the combined effects of lower volume and higher oil-related raw material costs at Plastics.
-- Revenues of $33.4 billion were about the same as second quarter 2002. Industrial sales were down 9% to $17.6 billion, reflecting lower U.S. gas turbine sales at Power Systems; excluding Power Systems in both periods, industrial sales rose 2%. Sales of product services grew 11% to $5.6 billion. Financial services revenues of $15.9 billion were up 14%, and combined net revenues (revenues from services less interest and other financial charges) of Commercial Finance, Consumer Finance and Equipment Management grew 12%.
-- Cash generated from GE's operating activities in the first half of 2003, excluding progress collections, was $5.5 billion, down 10% from last year's $6.1 billion, reflecting the planned reduction in the GE Capital Services dividend to the parent company. Including progress collections, GE's total cash flow from operating activities was $4.2 billion, up 22% from last year's $3.5 billion.
"We are executing on a disciplined strategy to create growth with high returns," Immelt said. "GE is meeting its commitments despite a slow-growth economy. I'm proud of the GE team."
Second Quarter 2003 Business Highlights
Aircraft Engines (GEAE)
-- Won engine and services orders in the quarter totaling $2.7
billion, up 7% from second quarter 2002.
-- Scored key wins in commercial engines, with regional jet
customers including JetBlue Airways (which selected Embraer's
new GE-powered 190) and US Airways, and wide-body customers
including Qatar Airways, Emirates Airline, All Nippon Airways
and AirTran.
-- Reached new multi-year service agreements totaling $800
million with customers including Federal Express, Aer Lingus,
Volare and MTU (Motoren Turbinen-Union), bringing total
agreements to $29.7 billion; in addition, contracted with
Kuwait Airways to upgrade its GE-90 engines and boost thrust
to 94,000 pounds.
-- Won Sikorsky's approval of the CT7-8C turboshaft engine, which
produces 25% more power than its immediate predecessor, for
use in Sikorsky's new H-92 Superhawk helicopter.
NBC
-- Won record prime-time commitments of more than $3 billion in
the May "upfront" advertising period, taking one-third of
overall market growth.
-- Won its third consecutive prime-time season victory among
adults 18-49, the key advertiser demographic, with the
season's top four comedies, the Nos. 1 and 3 dramas and the
top two newsmagazines; maintained leadership among adults
18-49 in summer prime-time, increasing ratings (excluding
sports) 11% over 2002.
-- Acquired the U.S. television rights for the 2010 and 2012
Olympic Games, with GE becoming an International Olympic
Committee TOP (The Olympic Partners) sponsor beginning in
2005.
-- Increased CNBC's business-day viewership 35% over last year
among adults 25-54 and MSNBC's prime-time viewership 67%; grew
Bravo's primetime viewership 14% among adults 25-54.
Consumer Finance
-- Built out U.S. platform by completing acquisition of Conseco
Finance Corp.'s retail sales finance unit, adding $2.4 billion
in receivables.
-- Added $8.2 billion in U.K. assets by completing the
acquisition of First National, and agreed to acquire the
personal loan and auto loan businesses of Allbank from
Bankgesellschaft Berlin AG, which will add over $2 billion in
assets in Germany.
-- Renewed agreement to service the Lowe's private-label credit
card program in the U.S. through 2009, and signed card
agreements with Carrefour in Mexico and Indonesia.
Commercial Finance
-- Continued European growth with the acquisition of a $600
million portfolio from Abbey National Treasury Services.
-- Continued strong growth in healthcare financing, with U.S.
equipment financing volume up 40% over second quarter 2002;
development of a $225 million credit facility; and the
formation of a $600 million joint venture to acquire medical
office buildings.
-- Reached agreement to lease 14 Boeing 777-300ER wide-body
aircraft to Emirates Airline, one of the world's
fastest-growing airlines, and ended the quarter with only five
out of 1,189 aircraft on the ground.
Power Systems (GEPS)
-- Shipped 24 heavy-duty gas turbines from Greenville, South
Carolina, compared to 86 in second quarter 2002; European
facilities shipped 22 heavy-duty turbines compared to 32 last
year.
-- Signed new contractual service commitments valued at $1.3
billion, including two with 25-year terms and two with 14-year
terms; commitments in place at the end of the quarter totaled
$29.3 billion and covered 13% more gas turbines and 11% more
sites than in second quarter 2002.
-- Shipped 239 wind turbines in the quarter; won agreements to
supply more than 500 1.5-megawatt wind turbines to FPL Energy
in the U.S. and Energia Hidroelectrica de Navarra S.A. in
Spain; agreed to develop a 25-megawatt wind farm with
Airtricity in the Irish Sea, the first offshore application of
GE Wind's new 3.6 megawatt turbines.
-- Completed acquisition of Jenbacher A.G. of Austria, a global
manufacturer of reciprocating gas engines for power
generation.
Medical Systems (GEMS)
-- Received total orders in the quarter of nearly $2.5 billion,
up 2% over a robust second quarter 2002.
-- Saw strong growth in orders for new products, including
LightSpeed(16)(TM) multi-slice CT scanners, ultrasound devices
including the Voluson 730 4D system and the GE LogiqBook(TM)
portable system, and digital x-ray systems including the
Innova(TM) 4100.
-- Launched the advanced LightSpeed Pro(16)(TM) CT scanner, which
provides higher-resolution imaging power at lower doses.
-- Continued build-out of healthcare information technologies
(IT) platform with agreement to acquire Triple G(R) Systems
Group, an IT systems provider with a presence in more than 450
clinical laboratories worldwide.
Industrial Systems (GEIS)
-- Continued to build out its security and sensors growth
platforms with agreements to acquire Monitoring Automation
Systems (software); International Fiber Systems, Inc. (digital
fiber optic products); and substantially all the assets of
Kampro Technology, Inc. (image sensing technologies).
-- Succeeded in making GE Interlogix's Entryscan(3)(TM) the only
walk-through explosive trace detection system to pass the U.S.
Transportation Administration's laboratory acceptance testing.
Specialty Materials (GESM)
-- Agreed to acquire OSi Specialties from Crompton Corporation in
exchange for cash and GESM's Specialty Chemicals unit,
bringing GESM's Silicones unit a strong complementary
portfolio of organosilicones products, opening large new
markets and adding net annual revenues of nearly $300 million.
Insurance (GEI)
-- Agreed to sell GE Edison Life and its U.S. Auto & Home unit to
American International Group for approximately $2.15 billion
in cash and a pre-closing dividend of approximately $440
million, executing GEI's strategy to re-align operations
around markets offering the greatest growth opportunities,
such as targeted consumer retirement income and protection,
selected commercial and reinsurance segments, and credit
enhancements such as mortgage insurance.
Consumer Products (GECP)
-- Launched 18 new products, including the GE Profile Harmony(TM)
Clothes Care System, GE Profile(TM) Stainless Steel cooking,
dishwasher, and refrigeration products, and advanced lighting
products, and won No. 1 ranking in side-by-side and
top-freezer refrigerators in testing by a leading consumer
magazine.
-- Increased sales of the Monogram(R) high-end product line more
than 15% over second quarter 2002, with continued strength in
GECP's high-end Profile line.
Transportation Systems (GETS)
-- Secured $1.0 billion in customer commitments for new
locomotives and international modernizations, and sales of
services and signaling.
-- Delivered strong performance of GE Evolution Series(TM)
locomotives, the cleanest freight locomotives on the rails, in
more than 75,000 miles of revenue-producing service for Union
Pacific Railroad; Burlington Northern Santa Fe Railway agreed
to test 30 pre-production Evolution locomotives on trains in
revenue-producing service.
Plastics (GEP)
-- Launched a new series of X-GEN(TM) products, including the
highest-heat Ultem(R) resin available and GEP's first
thermoset plastic.
-- Showcased innovative new product technology at the National
Plastics Expo in Chicago, including paint-replacement film,
polycarbonate automotive glazing and large-part molding, and
current work with plastics by GE Global Research in muscle
replacement technology, hydrogen fuel cells and
nanotechnology.
GE (NYSE: GE) is a diversified technology and services company dedicated to creating products that make life better. From aircraft engines and power generation to financial services, medical imaging, television programming and plastics, GE operates in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at http://www.ge.com.
Caution Concerning Forward-Looking Statements
This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. More information about those factors is contained in GE's filings with the Securities and Exchange Commission. This presentation includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in our GAAP Reconciliation file on our investor relations website at http://www.ge.com/en/company/investor/webcast/webcast_071103.htm or http://www.ge.com/en/company/investor/secreport/reclass/sec8k2003ge. htm.
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[See attachment for detailed financial numbers.]
CONTACT:
General Electric, Fairfield
David Frail, 203/373-3387
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