GE quarterly revenue hurt by global oil rout

Apr 22, 2016, 3:01 PM EDT
(Source: Chris May/flickr)
(Source: Chris May/flickr)

GE's quarterly revenue was hurt by the global oil rout, making for a challenging macroeconomic environment.

The Wall Street Journal reports:

The global oil rout continued to weigh on General Electric Co., which posted a quarterly decline in operating income and orders for its core industrials business. GE reported growth in revenue and core earnings for the first three months of 2016, but declines in its units making locomotives, power turbines and oil industry equipment weighed on results. Shares, up 16% in the past year, slipped 1.5% to $30.50 in Friday morning trading. Chief Executive Jeff Immelt said the conglomerate’s diversity enabled it to withstand a “very challenging environment,” especially in the oil and gas business. The company maintained its annual guidance for investors but lowered its outlook for the oil unit, saying profits could fall as much as 30% over the course of 2016 and revenue may decline by 20%. “Diversity is a key strength during this period of volatility,” Mr. Immelt said on a conference call. “Most of the portfolio is strong, and we’re delivering. There’s plenty of business out there to achieve our goals.”

Reuters notes:

Still, GE affirmed its forecast of 2 percent to 4 percent growth for 2016. Some analysts had said the top end of that range appeared difficult to achieve due to sluggish demand for oil and gas equipment and a weak industrial economy. The company cut its full-year outlook for oil and gas equipment sales, saying it now expects a 30 percent drop. It had previously forecast a 10 percent to 15 percent decline.

USA Today writes:

The company is selling off a substantial portion of its GE Capital unit as it refocuses its efforts on its industrial businesses. Contemporaneously the company is asking theU.S. government to remove the GE Capital unit's too-big-to-fail designation, which brings with it extra regulatory scrutiny and provisions. GE Capital announced in April 2015 that it would sell about $200 billion of its assets. As of late March it had already reached agreements to sell $161 billion, of which $138 billion in deals have been closed. The moves include an exit from consumer lending and leveraged lending, as well as substantial reductions in real estate debt and equity holdings and commercial paper.