General Electric’s move to shed the bulk of its banking business and refocus on its core industrial operations has resulted in a first-quarter loss of $13.57 billion.
Last week the Fairfield, Conn., company said it would book roughly $16 billion in charges related to the sale of loans and assets of GE Capital Real Estate to various buyers, including Blackstone and Wells Fargo.
Excluding the exit charges, first-quarter operating earnings fell 6% from a year ago, to 31 cents a share, and revenue fell 3%, to $33.1 billion. Analysts polled by Thomson Reuters were expecting per-share operating earnings of 30 cents and revenue of $34.23 billion, excluding exit charges.
GE Chairman and chief executive Jeff Immelt said in a press release that the company performed well in the first quarter, “in an environment that remains volatile but with continued growth opportunities in infrastructure.”
“We delivered good first-quarter results in our industrial businesses, with 14% growth in operating EPS,” Immelt said. “And last week, we announced a new plan to create a simpler, more valuable industrial company by selling most GE Capital assets, a major step in our strategy to focus GE around its competitive advantages. We are reshaping the company.”
GE’s industrial segment profit rose 9%, to $3.6 billion, but revenue fell 1%, to $24.36 billion, in part due to a $950 million hit from foreign exchange. Oil and gas revenue fell 8%, to $3.96 billion, and the business line’s profit fell 3%, to $432 million.
A Wall Street Journal article Friday said that analysts predict continued pressure on oil and gas returns as oil-production companies continue to “slash” capital expenditures, including on GE’s oil-field equipment and services.
GE Capital, whose revenues fell 39%, to $5.98 billion, “has been a significant profit driver for the company, but it has fallen out of favor with investors, who fear it casts a pall on the company’s industrial business,” the WSJ wrote.