This summary is based on the second quarter fiscal 2007 earnings call conducted by General Electric Company (GE) on July 13, 2007.
IR: Dan Janki
Chairman, CEO: Jeff Immelt
CFO: Keith Sherin
Key Investors Issues
- EPS were 53 cents a share compared to 48 cents a share a year ago.
- Net income was $5.4 billion compared to $4.9 billion a year ago.
- Sales were $42.3 billion compared to last year''s $37.7 billion.
Second Quarter Highlights
Earnings from continuing operations were $5.4 billion, up 12% from $4.8 billion in second quarter 2006.
- EPS from continuing operations were 52 cents per share, up 13% from last year''s 46 cents per share.
- GE''s Infrastructure and Commercial Finance businesses contributed strong double-digit earnings growth.
Continuing revenues grew 12% to $42.3 billion.
- GE industrial sales were $24.3 billion, an increase of 10% from second quarter 2006, reflecting core growth and the net effects of acquisitions.
- Financial services revenues grew 11% over last year to $17.1 billion, primarily reflecting core growth.
Discontinued operations reflected a $21 million profit, down from last year''s $0.1 billion.
Effective in second quarter 2007, discontinued operations for all periods presented include the results of Plastics business, expected to be sold in third quarter 2007, and the results of former Advanced Materials business for periods prior to its sale in fourth quarter 2006. Accordingly, second quarter net earnings were $5.4 billion (53 cents per share) in 2007 and $4.9 billion (48 cents per share) in 2006.
- Organic growth was up 8%.
- Returns are up 30 basis points, in line with expectations.
The company had a good orders quarter.
- Major equipment was $13.1 billion, up 54%.
- The growth by business in aviation was close to $3 billion of orders, up 30%, energy $4 billion, up 70%, oil and gas up 50%, transportation, a fourfold increase in their orders to $2 billion.
- Order strength and infrastructure was up 83%.
- The backlog is $44 billion, up 50% versus a year ago.
- Service orders were $8 billion, up 11%. It was driven by good, strong spares orders in the aviations business as well as nice strength in oil and gas. There was double-digit backlog growth.
- The flow orders were under $4 billion, up 6%.
- The company had good strength in lighting and industrial.
Appliances had some strength in retail, which was offset by the contract channel.
- They are up 1% in total.
- Orders were $25 billion, up 32%.
- The backlog was up $18 billion versus a year ago, up 42%.
- The margins are down about 27 basis points year over year. The company continues to seek a strong market liquidity that drives margin depression.
- The total company margin, which includes the corporate items, is up 2.5 points.
- Segment profit is up 70 basis points.
The company has got 100 basis points of growth despite over 110 basis points of drag from mix from the acquisitions and the great equipment growth.
- Industrial and NBCU delivered positive margin growth, more than offsetting the impact from healthcare.
- The company worked to package up and sell proactively $3.7 billion of the loans. It was 75% of the portfolio at the time.
