FAIRFIELD, Conn.--(BUSINESS WIRE)--July 9, 2004--GE's second quarter 2004 earnings were $3.9 billion, 3% higher than second quarter 2003, the Company announced today. Excluding non-cash earnings from GE's principal pension plans, earnings increased 9%.
"Our earnings per share for the second quarter of 38 cents exceeded our previous guidance of 37 cents, as nine of 11 businesses contributed double-digit improvements to earnings and first-half cash from operating activities grew 61% over last year," said GE Chairman and CEO Jeff Immelt. "Orders continue to be strong, growing at 13%, with services orders up 29%. This is the best economy we've seen in years.
"We completed major portfolio moves during the quarter, closing the Amersham acquisition, the NBC Universal merger and the successful initial public offering of Genworth Financial. These changes, along with the continued build-out of our growth platforms, give GE a great set of businesses for the future. We continue to execute on our growth initiatives, with technology advances such as the GEnx jet engine and Jenbacher's co-generation systems; strong services growth across the board; global infrastructure and financial services wins in countries ranging from China to Kazakhstan to Latvia; and wins with customers as diverse as the U.S. Transportation Security Administration, Virgin America, and viewers of NBC, Bravo and Telemundo.
"We're on track to deliver excellent operating performance this year, and as such we are further narrowing our full-year guidance to $1.55-$1.60 per share. We are building strong momentum for 2005 and remain confident of 10-15% earnings per share growth for next year."
GE will discuss second quarter results 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 2004 Financial Highlights
-- Earnings were $3.924 billion, up 3% over last year's $3.794 billion. Earnings per share (EPS) were $.38, the same as last year. Nine of GE's 11 businesses -- Advanced Materials, Commercial Finance, Consumer Finance, Consumer & Industrial, Equipment & Other Services, Healthcare, Infrastructure, NBC Universal and Transportation -- contributed double-digit improvements to earnings. A variance analysis of second quarter EPS follows the text of this release.
-- Revenues of $37.0 billion increased 11% from last year's $33.4 billion. Industrial sales increased 13% to $20.0 billion. Excluding GE Energy, which is in the final year of declining gas turbine sales, industrial sales were up 22%, reflecting the combined impact of the Amersham and NBC Universal transactions as well as the stronger economy. Financial services revenues of $17.1 billion were up 8% over last year.
-- Cash generated from GE's operating activities (CFOA) in the first half of 2004 was $6.8 billion, up 61% over last year's $4.2 billion. This improvement reflects $1.8 billion of dividends from GE Capital Services (GECS), principally proceeds from the Genworth IPO. Industrial CFOA in the first half increased 27% over last year. The company's continuing focus on working capital and cash management leads GE to expect 10-15% growth in CFOA for the full year.
"Over the past three years of tough economic conditions and strategic repositioning, we've increased revenues and earnings every year, generated strong CFOA, and maintained our triple-A ratings; above all, we invested back into GE and made it a better company," Immelt said.
"We now have a GE with leading technology, great service franchises, global breadth and depth, and a tremendous team of people who are passionate about helping our customers succeed. We are using all of GE's resources to identify and drive new organic growth with incremental returns on invested capital. We are very confident about our future."
Second Quarter 2004 Business Highlights
Healthcare
-- Completed the acquisition of Amersham plc, creating a $14
billion U.K.-based global leader in healthcare diagnostics.
-- Increased total orders 42% over second quarter 2003 to $3.5
billion; excluding Amersham, orders grew 16% to $2.9 billion,
driven by 55% growth in PET (positron emission tomography)
orders to more than $120 million, and 21% services growth to
nearly $1.4 billion.
-- Increased China orders 25% over last year to $166 million,
with strength in most modalities.
-- Realized strong synergies with key customers between GE
diagnostic imaging and Amersham contrast agents, and achieved
double-digit growth in all Biosciences businesses.
Transportation
-- Received aircraft engine, locomotive and services orders in
the quarter totaling $3.4 billion, with 33% growth in services
orders over last year driven by strong spare parts orders for
commercial and military engines and aeroderivatives.
-- Selected by Boeing as one of two companies to power its new
7E7 Dreamliner with the new GEnx engine, positioning GE for
placement on as many as 2,000-3,000 aircraft over the next 20
years.
-- Through CFM International (CFMI), a 50/50 joint company
between GE and Snecma Moteurs of France, was selected by
Virgin America to provide engines for its 33-aircraft launch
fleet.
-- Through CFMI, was selected by the U.S. Navy to power 109
multi-mission maritime aircraft that will replace its P-3
fleet.
-- Received a $150 million order from KTZ, Kazakhstan's national
railroad, for 200 locomotive modernization kits, to be shipped
through 2006.
-- Shipped nine GE Evolution Series(TM) locomotives during the
quarter, bringing the total pre-production fleet to 49
locomotives, which have logged nearly 2 million miles and 22
locomotive-years of experience with 96% reliability.
Energy
-- Signed new contractual service agreements during the quarter
totaling more than $750 million, increasing the number of gas
turbines and sites covered at the end of the quarter by 12%
over the end of second quarter 2003.
-- Agreed to acquire ChevronTexaco's gasification technology
business, expanding GE's capabilities in the "cleaner coal"
segment of power generation.
-- Received a contract for GE Jenbacher to provide 22 complete
gas engine cogeneration systems for a Ukrainian project, the
largest of its kind in the world in terms of total power
output, to convert coal mine gas into energy and help reduce
methane emissions.
-- Received orders for 100 1.5-megawatt wind turbines, including
33 for the Fuesanta project in Spain.
-- Continued to win business in China, receiving a contract to
supply three hydro turbines and additional equipment for the
Sinanjiang River Hydropower Station in Yunnan Province, as
well as an order from the China Southern Power Grid Co. for
systems to increase the power transfer capability of one of
its transmission corridors.
-- Shipped 29 heavy-duty gas turbines from Greenville, S.C. and
Belfort, France, compared with 42 in second quarter 2003.
-- Agreed to acquire BHA Group Holdings, Inc., a leading provider
of air quality control products, and the assets of three
business units of S.D. Myers, Inc., to enhance Energy's
transformer services offerings.
Commercial Finance
-- Acquired more than $2 billion in assets from Boeing Capital
Corp., enabling broader financial solutions to be offered to
more than 170 new customers.
-- Acquired Haslemere NV, a major U.K.-based multi-sector
commercial property company with $700 million of assets
located primarily in London.
-- Acquired IKON Office Solutions' U.S. leasing portfolio, adding
$2.0 billion in equipment leasing assets.
-- Completed the largest-ever aircraft engine financing deal in
China with China Eastern Airlines, leased 15 new Airbus A320s
to Virgin America, and ended the quarter with none of Aviation
Services' 1,300-plus aircraft on the ground.
-- Increased Commercial Finance's presence in the Japanese real
estate market by $500 million by acquiring Alte Co., an Osaka,
Japan-based real estate company.
-- Acquired Ace Sogo Lease from Nissan Diesel Motor, the
fourth-largest Japanese truck/bus manufacturer, adding more
than $400 million in assets and expanding Ace's equipment
finance offerings.
Consumer Finance
-- Teamed with eBay and its subsidiary PayPal Inc. to launch new
consumer and commercial credit programs that help U.S. online
buyers fund their purchases through PayPal and provide online
sellers with access to lines of credit and working capital for
growth.
-- Completed the acquisition of WMC Finance Co., a leading U.S
wholesale lender, adding U.S. new-home financing solutions to
Consumer Finance's global mortgage capabilities.
-- Signed a five-year agreement with Drexel Heritage, one of the
world's premier furniture manufacturers, to provide a new
retail credit program for its U.S. customers.
-- Completed the acquisition of Latvian sales finance and auto
loan provider RD Lizinga Grupa, bringing Consumer Finance to a
40th country and creating a new platform in the Baltic region.
-- Launched the Payroll Card, a debit-based MasterCard(R) product
that provides a simple, cost-saving and convenient alternative
to payroll checks for companies that pay millions of
employees, contractors and temporary workers in the U.S. who
don't have a checking account.
NBC Universal
-- Completed the merger of NBC and Vivendi Universal
Entertainment, creating NBC Universal, one of the world's
leading media companies.
-- Brought in total advertising commitments during May's
"upfront" ad sales period of more than $5 billion, leading the
major broadcast networks and seeing strong gains at Bravo and
Telemundo, the fastest-growing cable and broadcast networks in
the U.S.
-- Won the quarter in the key demographic of adults 18-49 by a
margin of nearly 10% over the nearest competitor, led by "The
Apprentice," television's No. 1 series of the quarter in that
demographic.
-- Won the May sweeps among adults 18-49 for NBC's ninth May win
in the last 10 years, and drew the largest average audience
(52.5 million) for any entertainment telecast in six years
with the May 6 finale of "Friends."
-- Extended NBC's late-night leadership, with Jay Leno delivering
a 47% margin of victory over his nearest competitor and Conan
O'Brien and Carson Daly setting second-quarter ratings
records.
-- Doubled Telemundo's weekday prime-time ratings among adults
18-49 over last year, with the highest ratings in that
demographic in a decade.
-- Doubled Bravo's average audience among adults 18-49 over last
year, and increased USA Network's adults 25-54 audience by 13
percent.
Infrastructure
-- Successfully completed a 30-day passenger rail pilot with the
U.S. Transportation Security Administration (TSA) of the GE
EntryScan3, a walk-through explosives detector that detects
microscopic traces of explosives in seconds, and launched a
similar pilot at five U.S. metropolitan airports.
-- Introduced nearly 50 new high-technology products, including a
"ruggedized" fiber optic security camera that can withstand
some of the harshest environments and a factory automation
software platform that integrates with other original
equipment manufacturers' systems.
-- Moved toward completing the acquisition of InVision
Technologies, Inc. with InVision shareowner approval;
InVision's CT (computed tomography) -based scanners will
complement GE's trace explosives detection systems.
-- Received a multi-year order from the U.S. Department of
Defense for an advanced jet fuel additive from
Infrastructure's water and process technologies unit that
helps improve the quality of standard aircraft fuel from any
global source, thereby improving operability and reducing
costs.
Advanced Materials
-- Continued to expand into high-growth segments with
"wing-to-wing" technologies, including the use of advanced GE
Lexan(R) SLX(TM), Geloy XTW(R) and Ultem(R) engineered resins
in the global automobile segment to reduce need for paint,
eliminate secondary operations for manufacturing efficiency
and lower cost, and increase design freedom.
-- Launched new NXT(R) silane technology for tires, which lowers
manufacturers' production costs and improves fuel efficiency
and environmental emissions.
-- Introduced new Lexan Excel and Thermoclear(R) Solar Control
Infrared sheet UV protection products for the building and
construction segment that increase level of light transmission
by up to 60 percent and reduce interior heat build-up by up to
40 percent.
-- Announced new Lexan EXL(TM) resin applications with improved
impact strength, durability and design flexibility for China's
mobile phone and telecommunications segments.
-- Announced China Palette(R), an exclusive collection of
Visualfx(R) resins designed specifically for China's rapidly
growing consumer products segment.
Insurance
-- Completed the initial public offering of 30% of the equity of
Genworth Financial, Inc., releasing more than $2.5 billion in
equity capital for investment in growth initiatives and
reduction of "parent-supported debt."
-- Focused Employers Reinsurance Corp. (ERC) on specialized
market segments for which it can provide differentiated
services, including regional property and casualty
reinsurance, and completed five new reinsurance treaties with
regional companies in Australia and New Zealand.
Consumer & Industrial
-- Increased unit sales of high-end Profile(R) and Monogram(R)
appliances 21% over second quarter 2003.
-- Launched several new products, including the new Profile(R)
ClimateKeeper2 dual-evaporator refrigerator, Monogram(R)
undercounter refrigeration modules, GE Xensation(TM) auto
lighting and several stainless steel appliance upgrades.
Equipment and Other Services
-- Announced five new sensor capabilities for GE's VeriWise(TM)
asset-tracking technology, which helps over-the-road trailer
customers better meet productivity and security goals, and
formed an Asset Intelligence business unit to develop
additional markets for VeriWise technology.
-- Signed a joint development agreement with Science Applications
International Corporation, a leading security technology firm
with commercial and government customers, to accelerate the
application of Veriwise to sea containers.
GE (NYSE:GE) is a diversified technology, media and financial 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 contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of GE. Forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political, economic, business, competitive, market, regulatory and other factors. We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise. 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 this press release.
[See attachment for detailed financial numbers.]
CONTACT:
General Electric, Fairfield
David Frail, 203-373-3387
[email protected]