New York: General Electric Co’s fourth-quarter revenue trailed analysts’ estimates as the persistent oil-patch slump damped demand for the industrial equipment that forms the heart of the company’s business. The shares declined the most in almost three months.
“2016 was an extremely difficult year for oil and gas,” Chief Financial Officer Jeff Bornstein said yesterday on a conference call after GE announced earnings.
The results underscored GE’s challenges to find its footing after a sluggish economy curbed growth in 2016 and pressured Chief Executive Officer Jeffrey Immelt’s efforts to sharpen the focus on machinery such as gas turbines and jet engines. Immelt is counting on new products in power and aviation to counter weakness in the oil operations after the company shed most of its financial businesses.
The shares fell 1.7 percent to $30.67 at 9:59 am in New York after earlier dropping as much as 2.2 percent for the biggest intraday decline since October 21. GE gained 9.5 percent in the 12 months through Thursday, compared with a 20 percent advance for the Standard & Poor’s 500 Index.
GE is facing a “slow-growth and volatile environment,” Immelt said on a conference call. Over the past year, strength in the aviation, health-care and renewable-energy divisions helped the company “offset a challenging oil and gas market to deliver a year in line with expectations,” he said.
Revenue fell 2.4 percent to $33.1bn in the quarter, the Boston-based company said in a statement. That was below the $33.9bn predicted by analysts, according to the average of estimates compiled by Bloomberg. Adjusted earnings fell to 46 cents a share, matching analysts’ estimates.
“I don’t see any signs of big problems, but it was a grind quarter,” Nicholas Heymann, an analyst with William Blair & Co.
Investors are watching how the presidency of Donald Trump could affect GE, including the possibility of corporate tax reform that could bring down the company’s bill.
