OREANDA-NEWS. GE Reports 2Q’13 Operating EPS USD 0.36, Revenues USD 35.1B; Infrastructure orders +4%, U.S. orders +20%, record backlog of USD 223B; Industrial segment margins +50 basis points
2Q 2013 Highlights

2Q orders +4%; U.S. orders +20%
Operating EPS of USD 0.36, includes positive items of USD 0.02 offset by USD 0.04 of restructuring and other items
Profit growth in six of seven Industrial businesses
Industrial segment growth market revenues +5%
Industrial segment margins +50 bps. with strong performance in six of seven segments
USD 9.9 billion returned to shareholders year-to-date
Overall framework for 2013 remains unchanged

GE [NYSE: GE] announced today second-quarter 2013 operating earnings of USD 3.7 billion, or USD 0.36 per share, down 8% and 5% respectively from the second quarter of 2012. GAAP earnings from continuing operations were USD 3.3 billion, or USD 0.31 per share, down 11% and 9% respectively. Net earnings of USD 3.1 billion, or USD 0.30 per share, rose 1% and 3% respectively from the year-ago period. Positive items of USD 0.02 per share were more than offset by USD 0.04 per share of restructuring and other items. Revenues were USD 35.1 billion for the quarter, down 4% from the year-ago period.

“In the second quarter, GE achieved Industrial segment profit growth in six of seven businesses, reduced structural costs, and continued to invest in growth,” said GE Chairman and CEO Jeff Immelt. “We executed in a business environment that was slightly improved versus the first quarter. Emerging markets remain resilient, and in the U.S. we saw strong growth in orders this quarter. Europe is stabilizing but still challenged. We expect margin expansion to continue and segment profits to grow in the second half of the year.”

Infrastructure orders for the quarter rose 4% to USD 24.1 billion. GE’s backlog of equipment and services at the end of the quarter was its highest ever at USD 223 billion, up USD 7 billion from the first quarter. Infrastructure order pricing rose 0.9% for the quarter.

Industrial segment margins rose 50 basis points in the quarter. Strong price performance and material deflation contributed to USD 293 million of positive value gap. This was partially offset by unfavorable volume timing for Power & Water. Unit shipments in Power & Water are expected to strengthen in the second half of the year. The Company has reduced Industrial structural costs USD 474 million year-to-date. GE remains on track for planned margin growth of 70 basis points for the year.

During the quarter, GE and its aircraft engine joint ventures announced Aviation wins totaling more than USD 26 billion at the Paris Air Show. This included commitments for USD 8.6 billion for CFM LEAP engines and CFM56-5B engines for AirAsia, USD 1.8 billion for GEnx engines for United Airlines, and USD 760 million for CFM LEAP engines in 30 Boeing 737 MAX 8 airplanes for CIT Group. In Healthcare Systems, U.S. equipment orders grew 9% versus the year-ago period.

GE Capital progressed with its strategy to decrease the size of its portfolio and focus on its core businesses. GE Capital earnings fell 9%, in line with planned asset reductions. ENI (excluding cash and equivalents) was USD 391 billion at quarter-end. Volume was up 5% for the quarter, with good returns. General Electric Capital Corporation’s (GECC) Tier 1 common ratio under Basel 1 rose 108 basis points to 11.2%, and net interest margin was strong at 5%. During the quarter, GECC paid USD 1.9 billion in dividends to the parent, and GE announced plans for up to USD 6.5 billion in total GECC dividends for 2013.

GE generated USD 5.1 billion in total cash from operating activities (CFOA) during the second quarter, excluding NBCU deal-related taxes. CFOA was lower year-to-date primarily due to NBCU deal-related taxes. GE ended the quarter with USD 89 billion of consolidated cash and cash equivalents. GE Capital commercial paper outstanding was USD 36 billion at quarter-end, down from USD 43 billion at the end of 2012.

GE continues to execute on its balanced, disciplined capital allocation plan. GE has returned USD 9.9 billion to investors year-to-date through dividends and share buybacks. In the second quarter, GE announced the USD 3.3 billion acquisition of Lufkin Industries, a leading provider of artificial lift technologies for the oil and gas industry and a manufacturer of industrial gears. This transaction closed on July 1, 2013. GE’s December 2012-announced acquisition of the aviation business of Avio, an Italy-based manufacturer of aviation propulsion components and systems for civil and military aircraft, remains on track to close in the second half of 2013.

Immelt concluded, “This quarter we delivered Industrial segment profit growth. We continue to execute on operational priorities within our control: achieving our cost-out goals, maintaining a very strong cash position, reducing the size of GE Capital, and returning substantial cash to shareholders. Our overall framework for the year is unchanged.”

Second-quarter Highlights:

Second-quarter operating earnings were USD 3.7 billion, down 8% from second-quarter 2012 and operating EPS was USD 0.36, down 5%. GAAP earnings from continuing operations (attributable to GE) were USD 3.3 billion, down 11% to USD 0.31 per share and down 9% from the second quarter of 2012. Positive items of USD 0.02 per share were more than offset by USD 0.04 per share of restructuring and other items.

Including the effects of discontinued operations, second-quarter net earnings attributable to GE were USD 3.1 billion (USD 0.30 per share) in 2013 compared with USD 3.1 billion (USD 0.29 per share) in the second quarter of 2012. This is an increase in net earnings of 1% and net EPS of 3%.

Second-quarter revenues were down 4% at USD 35.1 billion. Industrial sales of USD 24.6 billion fell 2% versus the second quarter of 2012. GECC revenues of USD 11 billion fell 3% from last year.

Cash generated from GE operating activities year-to-date totaled USD 3.7 billion (USD 5.3 billion excluding NBCU-related taxes), compared to USD 6.8 billion last year.

The accompanying tables include information integral to assessing the Company’s financial position, operating performance and cash flow.