GE Q1 Earnings, Sales Decline, On Cheap Crude, Pricey Dollar
General Electric beat first-quarter earnings estimates Friday, but the strong dollar and energy weakness weighed on revenue.
The industrial conglomerate's Q1 earnings fell 6% to 31 cents a share. Analysts polled by Thomson Reuters expected 30 cents.
Revenue fell 12.5% to $29.3 billion, short of views for $34.2 billion. Industrial segment revenue fell 1% to $24.4 billion due to the strong dollar.
GE (GE) shares slipped 0.1%.
GE plans to shed the bulk of GE Capital over two years and generate over 90% of its earnings from industrial businesses by 2018, up from 58% in 2014. The company is expected to focus on core businesses like water, power, transportation, oil and gas, and health care.
"We think underlying industrial growth remains solid, and see opportunities for operating margin expansion," said Jim Corridore, S&P Capital IQ analyst, in a Friday note. "We remain positive on GE's transformation.
But Edward Jones analyst Logan Purk questioned how GE will drive growth without its finance unit, which historically accounted for nearly half of its profit. "Can they deliver meaningful sales and earnings growth?
Some GE industrial segments are under pressure. Revenue at its oil and gas business, 15% of GE's total, fell 8% in Q1.
Transportation revenue rose 7% to $1.3 billion. But health-care revenue fell 3% to $4 billion, and aviation revenue slid 2% to $5.67 billion.
GE's aviation business suffered a blow Friday when Emirates Airline awarded Rolls-Royce a $9.2 billion contract to build engines for 50 Airbus (EADSY) A380 super-jumbo jets, ousting GE's joint venture with United Technologies' (UTX) Pratt & Whitney.
But GE said that aviation remained strong in Q1 and cited orders for $800 million LEAP engines, which will be used on new Boeing (BA) and Airbus jets.
The strong dollar also hit Honeywell (HON). Q1 EPS rose 10% to $1.41, beating views by 2 cents. Revenue fell 4.8% to $9.21 billion, below views for $9.48 billion. Aerospace sales fell 6% to $3.61 billion. Automation and controls sales slid 3%. Shares lost 2%.
