General Electric Industrial Profit Increased by 5% for 2nd Quarter

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General Electric reported a 5% increase in its industrial division operating profit for the 2nd quarter on Friday, while speeding up its planned exit from finance.

A net loss amounting to $1.36bn was reported by GE for the quarter that led from a $4.33bn shedding operations charge, which is mostly in finance. The operating earnings increased 19% to $0.31 per share that includes the financial services contribution related to the industrial businesses.

The multinational corporation had been steadily cutting back GE Capital, its finance arm since the 2008 financial crisis. The company accelerated its timetable in April; and to get over $200bn in assets from GE Capital by 2018, traded its commercial real estate businesses.

GE aims to gain 90% by 2018 from its industrial division that includes jet engines, oil-drilling gear, gas turbines, railway locomotives and medical-imaging equipment. Prior to the financial crisis, over half of the company’s profits are from finance.

The performance of GE’s industrial division is closely monitored by investors and industry analysts, including its ability to attain gainful profit in spite of the present economic weakness worldwide.

In general, the industrial machinery global market, particularly oil and gas equipment, is deteriorating, with the lowering of oil prices. Many industrial equipment corporations, including Emerson, United Technologies and Dover, have recently reduced their financial outlook for the year.

The large oil and gas equipment business of G.E. has cut costs aggressively, as its revenue went down to $4.06bn in the quarter. In spite of these results, the strong performance of G.E.’s industrial businesses, including transportation, aviation and power and water, has benefited the company.

Jeffrey Immelt, CEO of G.E., said in a news release that the company has a strong industrial organic growth in the second quarter, but warned that the industrial goods worldwide market continues to be volatile and slow.

Mr. Immelt plans to sharpen their portfolio and develop its industrial business, but is confronted with regulatory challenges in both the U.S. and Europe. Last month, antitrust officials in Europe filed a formal objection to the $17bn deal of G.E. to purchase Alstom’s energy business. The regulators are afraid that the merging would get a big share of the large gas turbines European market that can lead to increases in prices.

This month, the Justice Department in the U.S. filed a suit to deter the sale of G.E.’s appliance division to Sweden’s Electrolux for $3.3bn. The U.S. government stated that the sale would give sufficient control for Electrolux in the stoves and ovens market, increasing the price for homebuilders and other consumers.

G.E. is not greatly affected, and is certain that the deals are only postponed. The company looks forward to complete the deals before the end of 2015.

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