Plummeting oil prices drove down General Electric’s fourth-quarter profits in most of its core industrial businesses.
Five of GE’s eight industrial business units experienced declines, including a 10% fall in the power turbine business and an 8% decline in the health-care unit, which makes imaging machines like MRIs. Overall industrial revenue fell by 1% in the quarter, largely due to a 16% drop in GE’s oil and gas unit.
The firm reaffirmed its 2016 outlook of operating income between the range of $1.45 and $1.55 per share, 2% to 4% organic growth, core margin expansion, cash generation between $30 million and $32 billion, and $26 billion returned to investors.
While the first few weeks of 2016 have been “especially volatile,” CEO Jeff Immelt said in a news release, GE believes “in the strength of our business model and that there is enough growth out there to deliver in 2016.”
He noted that orders in the fourth quarter grew 1% organically and the order backlog grew to $315 billion with the acquisition of Alstom SA’s power business.
GE made a number of moves to reshape its industrials segment in the quarter. In addition to closing on the Alstom deal, its largest acquisition ever, GE split out its renewable energy businesses, including new assets from Alstom, into a stand-alone business unit.
“GE is in the midst of a years-long transformation to refocus the conglomerate on its core industrial businesses like aviation and power,” the Wall Street Journal said. “Meanwhile, GE continues to wind down its lending business that has long been a distraction for investors who believed it dragged on the company’s share price.”
Overall for the period ended Dec. 31, GE reported a profit of $6.28 billion, or 64 cents a share, compared with a profit of $5.15 billion, or 51 cents a share, a year earlier.
Profit in the quarter included the $175 million breakup fee GE collected after its deal to sell its appliance unit to Sweden’s Electrolux collapsed in December. Earlier this month, GE struck a new deal to sell that business to China’s Haier Group for $5.4 billion.