OREANDA-NEWS.   GE [NYSE: GE] announced today second-quarter 2014 operating earnings of USD 3.9 billion, with operating earnings per share of USD 0.39, up 8% from the second quarter of 2013. GAAP earnings from continuing operations were USD 3.6 billion, with earnings per share of USD 0.35, up 13% from last year. Revenues were USD 36.2 billion for the quarter, up 3% from the year-ago period.

“GE had a good performance in the quarter and in the first half of 2014, with double-digit industrial segment profit growth, 30 basis points of margin expansion, and nearly USD 6 billion returned to shareholders,” said GE Chairman and CEO Jeff Immelt. “The environment continues to be generally positive.”

Industrial segment profits rose 9% in the second quarter to USD 4.2 billion. Industrial segment margins expanded 20 basis points over the prior-year period. Industrial segment revenues grew 7%, with organic growth of 5%. Growth market revenues were up 6% for the quarter, and growth market orders rose 14%, with increases in six of nine growth regions. Services revenues were up 5%, and services orders rose 14%.

GE’s backlog of equipment and services at the end of the quarter was USD 246 billion, up USD 23 billion over the year-ago period with increases in every segment. The Company’s investment in technology was reflected in its launch order during the quarter for Tier 4 locomotives, nine HA gas turbines to date, and its order for the oil and gas industry’s first 20k-psi rated deepwater drilling system. This week, GE and CFM (a 50/50 joint venture between GE and Snecma) also announced Farnborough Airshow wins of more than USD 36 billion at list price, including USD 13 billion with Emirates, USD 3.3 billion with easyJet, and USD 2.6 billion with American Airlines.

During the quarter, GE’s offer for Alstom’s Power and Grid businesses was accepted by the Alstom board and approved by the French government. It is proceeding to works council consultations and is subject to Alstom shareholder approval and customary regulatory approvals. The deal is targeted to close in 2015. GE expects Alstom to be accretive to earnings in 2015, and add USD 0.06 to USD 0.09 per share in 2016. This will accelerate the Company’s portfolio strategy to achieve 75% of earnings from its Industrial business by 2016.

GE Capital continued its strategy to decrease the size of its non-core portfolio. ENI (excluding cash and equivalents) was at USD 371 billion at quarter-end, down USD 2.4 billion from last quarter and down 5% from the year-ago period. General Electric Capital Corporation’s (GECC) estimated Tier 1 common ratio (Basel 1) rose 51 basis points from the year-ago period to 11.7%, and net interest margin was strong at 5%. Through the first half of the year, GECC has returned USD 1.4 billion in dividends to the parent. GECC recorded tax benefits in the quarter to reflect a lower expected tax rate for 2014, primarily driven by its planned tax-efficient disposition of the consumer bank in the Nordics.

GE is also announcing today that it is targeting the IPO of its North American Retail Finance business (Synchrony Financial) for the end of July, the first step in a planned, staged exit from that business.

GE continues to make good progress with its simplification goals. The Company is on track to meet its goal of USD 1 billion or more in structural cost-out for the year, with USD 382 million of cost-out through the first half of 2014.

Cash from GE operating activities (CFOA) was USD 3.4 billion year-to-date. GE ended the quarter with USD 87 billion of consolidated cash and cash equivalents. The Company has returned USD 5.9 billion to shareowners year-to-date, including USD 4.4 billion of dividends and USD 1.5 billion of stock buyback.

Immelt concluded, “Our total-year framework is on track and we are committed to delivering for our investors. Investments in R&D are paying off in Industrial segment growth and the share gains we see across the board are reinforced by the Farnborough Airshow this week. GE Capital is returning cash to the parent while becoming more focused on its core business. Our balanced approach to capital allocation is delivering cash to shareowners. With the Retail Finance split-off and Alstom acquisition, we are boldly repositioning the Company for the future.”

Second-quarter Highlights:


Second-quarter operating earnings were USD 3.9 billion, up 7% from second-quarter 2013, and operating EPS was USD 0.39, up 8%. GAAP earnings from continuing operations (attributable to GE) were USD 3.6 billion, up 10%, or USD 0.35 per share, up 13% from the second quarter of 2013.

Including the effects of discontinued operations, second-quarter net earnings attributable to GE were USD 3.5 billion (USD 0.35 per share) compared with USD 3.1 billion (USD 0.30 per share) in the second quarter of 2013.

Second-quarter revenues increased 3% to USD 36.2 billion. Industrial sales of USD 26.2 billion increased 7% compared to the second quarter of 2013. GECC revenues of USD 10.2 billion decreased 6% from last year.

Cash generated from GE operating activities year-to-date totaled USD 3.4 billion. Cash generated from Industrial operating activities totaled USD 2.0 billion.