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GE Transportation 2Q 2012 Earnings

ERIE, Penn. –– GE [NYSE: GE] announced today second-quarter 2012 Operating Earnings of $4.0 billion, or $0.38 per share, up 7% and 12% respectively from the second-quarter of 2011. GAAP earnings from continuing operations (attributable to GE) were $3.7 billion, up 2%, or $0.34 per share, up 3%. Revenues were $36.5 billion for the quarter, up 2%. Industrial segment revenue grew by 9%, with organic growth of 10%. The strength of GE’s Industrial portfolio was underscored by strong segment profit increases in Energy, Oil & Gas and Transportation. The company is performing well and is on track to deliver double-digit earnings growth in 2012 for both Industrial and GE Capital segments. 

“Today’s results demonstrate that we are executing on our growth strategy in the midst of a still volatile global economy,” said GE Chairman and CEO Jeff Immelt. “GE Capital’s strong operating performance and capital position allowed it to return a $3 billion dividend to the parent, and our Industrial segments delivered another quarter of double-digit organic revenue growth. Our strategy to invest in growth markets is paying off, as we achieved orders expansion in growth markets of 14% and revenue growth of 17%. We ended the quarter with a record backlog.” 

Infrastructure orders were $23.1 billion, down 1% primarily driven by a 37% decrease in orders for wind turbines. Orders were up 8% on a year-to-date basis. Total orders performance included: Aviation up 5% and Transportation up 2%. Orders for the quarter included: GE Transportation orders for 176 locomotives from railroad customers in North America, up 28% from second-quarter 2011. In Australia, GE Energy is supplying 5 Frame 6B gas turbines, 3 SC4 single-flow steam turbines and 5 heat recovery generators to provide 500 megawatts of installed power capacity for a combined cycle power plant for the Ichthys liquefied natural gas (LNG) project. It will enable the facility to produce more than 8 million tons of LNG each year. In Russia, GE Energy signed a deal with REP Holding for the assembly of 28 GE MS 5002E gas turbines. 

Total revenues for the quarter were $36.5 billion, up 2%. Revenues were negatively impacted by $0.9 billion due to FX and further shrinkage of our GE Capital business. GE’s second-quarter Industrial segment revenues were $25.0 billion, up 9%. Industrial segment organic revenues were up 10% for the quarter. Industrial growth market revenues were up 17%, driven by double-digit growth in Australia, Canada, China, Latin America, the Middle East/North Africa, Southeast Asia and Russia. 

Industrial segment profit was up 7% to $3.7 billion and segment operating profits were strong in Energy Infrastructure and Transportation, up 13% and 58%, respectively. In addition, pricing on orders was up 1.2% in total with higher prices in 4 out of 5 businesses. Energy Infrastructure pricing was up 1.8%. Cash generated from operating activities was up 55% at $6.8 billion. GE ended the quarter with $74 billion of consolidated cash and cash equivalents. 

Immelt concluded, “Our Industrial outlook remains positive. Margins have stabilized and Energy, Oil & Gas, and Transportation performed very well with double-digit profit increases. We are confident in our double-digit EPS growth expectations for 2012 and are raising our operating cash expectations to $17-19 billion based upon the restart of the GE Capital dividend.” 

Second-quarter Highlights: 

Second-quarter operating earnings were $4.0 billion, up 7% from second quarter 2011 and operating EPS was $0.38, up 12% from $0.34 in the second quarter of last year. GAAP earnings from continuing operations (attributable to GE) were $3.7 billion, up 2%, or $0.34 per share, up 3% from the second quarter of 2011. 

Including the effects of discontinued operations, second-quarter net earnings attributable to GE were $3.1 billion ($0.29 per share attributable to common shareowners) in 2012 compared with $3.7 billion ($0.35 per share attributable to common shareowners) in the second quarter of 2011. Discontinued Operations included $0.05 per share of charges primarily related to WMC and GE Money Japan reserve adjustments. Positive one-time tax items of $0.02 per share were offset by $0.02 per share of restructuring and other charges. 

Second-quarter revenues increased 2% to $36.5 billion. Industrial sales of $25.1 billion increased 9% versus the second quarter of 2011. GE Capital (GECC) revenues of $11.5 billion decreased 8% from last year, driven by lower assets in-line with plan. 

Cash generated from GE operating activities in the first six months of 2012 totaled $6.8 billion, up 55% from $4.4 billion last year. Cash generated from GE Industrial operating activities in the first six months of 2012 totaled $3.8 billion, down 13% from last year.

GE Transportation reported $1.6 billion in second-quarter 2012 revenues, up 27% year-over-year. 

Segment profits for 2Q in 2012 were $282 million, up 58% from $178 million in the second quarter 2011. 

GE Transportation’s orders in the second quarter rose 2% to $1.4 billion, driven by higher locomotive orders in North America. 

“The second quarter was a significant one for us,” said Lorenzo Simonelli, President and CEO of GE Transportation. “We continued our record of double-digit revenue growth and built on our positioning as a global technology and manufacturing leader. We announced plans to acquire two manufacturers of underground mining equipment, one in North America and one in Australia, to expand our role in the global mining industry. We also plan to double capacity at our high-tech manufacturing plant in Schenectady, NY, to produce industrial batteries for the telecoms industry and utility operators worldwide.” 

About GE 

GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com

About GE Transportation 

GE Transportation, a unit of GE (NYSE: GE), solves the world’s toughest transportation challenges. GE Transportation builds equipment that moves the rail, mining and marine industries. Our fuel-efficient and lower-emissions freight and passenger locomotives, diesel engines for rail, marine and stationary power applications, signaling and software solutions, drive systems for mining trucks, and value-added services help customers grow. GE Transportation has approximately 12,000 employees worldwide. For more information visit www.getransportation.com

Caution Concerning Forward-Looking Statements: 

This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in the European sovereign debt situation; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (Grey Zone); our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; our plan to resume GECC dividends, which is subject to Federal Reserve review; our ability to convert customer wins (which represent pre-order commitments) into orders; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; the impact of potential information technology or data security breaches; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. 

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