4Q and Full-Year 2013 Highlights
• 4Q operating EPS of $0.53, up 20%
Industrial segment profit +12%, with six of seven segments growing earnings
5% Industrial segment organic revenue growth
Full-year operating EPS of $1.64, up 9%
• 4Q U.S. orders +8%, growth market orders +13%, Europe orders +3%
• 4Q margins up 100 bps vs. 4Q’12; full-year margins +66 bps excluding acquisitions
$1.6 billion reduction in Industrial structural costs in 2013, ahead of plan
• GE Capital earnings +38% including gains, with ENI (excluding cash and equivalents) at $380 billion
GECC Tier 1 common ratio (Basel 1) at 11.4%, +1.2%
• $18.2 billion returned to shareholders in 2013
• $89 billion of consolidated cash and equivalents at year-end
• 2014 framework remains unchanged
GAAP earnings from continuing operations were $5.0 billion, with earnings per share of $0.49, up 20%. Revenues were $40.4 billion for the quarter, up 3% from the year-ago period, and $146.0 billion for the year.
“GE ended the year with strong fourth-quarter earnings and margin growth in an improving but mixed environment,” said GE Chairman and CEO Jeff Immelt. “We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe. We had strong operating performance for the year and are pleased with our execution in 2013, taking $1.6 billion of cost out, growing margins, reducing the size of GE Capital, and returning more than $18 billion to shareholders.“
Industrial segment profits rose 12% to $5.5 billion. Six of seven Industrial segments had positive earnings growth. Industrial segment margins improved 100 basis points over the prior-year period. Infrastructure orders for the quarter were $30.7 billion, up 8%. GE’s backlog of equipment and services at the end of the quarter was its highest ever at $244 billion, up $15 billion from the third quarter. Industrial segment revenues grew 6%, with organic growth of 5%. Growth market revenues were up 10% for the quarter, with double-digit growth in six of nine growth regions, and growth market orders were up 13%. Services revenue grew 6%, with gains in most segments.
During the quarter, GE and CFM (a 50/50 joint venture between GE and Snecma) announced Dubai Airshow wins of more than $40 billion at list price, including GE’s largest airline commitment ever, valued at $11 billion at list price, for 300 GE9X engines for Emirates. GE also announced a nearly $700 million contract with Saudi Electricity Company for F-class combined-cycle gas turbines and services, and was awarded 545 megawatts of commitments for wind turbines in Brazil’s A-3 auction. GE’s investment in research & development continued to yield new products in 2013, including the release of 14 new Industrial Internet technologies to help airlines, energy companies, hospitals and other customers cut downtime, improve productivity, save fuel and reduce emissions.
GE Capital continued to execute on its strategy of becoming a smaller, more focused financial services business. GE Capital earnings rose 38% including gains from the IPO of our Swiss consumer business, and the BAY disposition. ENI (excluding cash and equivalents) was $380 billion at quarter-end. Volume was up 5% for the quarter, with attractive returns. General Electric Capital Corporation’s (GECC) estimated Tier 1 common ratio (Basel 1) rose 1.2% to 11.4%, and net interest margin was strong at 5%. During the quarter, GECC paid $2 billion in dividends to the parent.
Full-year cash from GE operating activities (CFOA), excluding NBCUniversal deal-related taxes, was $17.4 billion. GE ended the quarter with $89 billion of consolidated cash and cash equivalents. GE’s strong cash performance for the quarter and the year supported its balanced capital allocation plan. The Company returned $18.2 billion to shareowners in 2013, including $7.8 billion of dividends and $10.4 billion of stock buyback. During the quarter, GE announced a 16% increase in its quarterly dividend to $0.22 per share, the fifth increase in just over three years. GE also completed $9 billion of acquisitions in 2013.
GE made a number of investments in the quarter to strengthen the company in 2014 and beyond. The Company recorded $0.05 per share of Industrial restructuring and other charges, partially offset by $0.03 per share of Industrial gains. This, and other moves, should allow GE to increase its planned cost-out efforts in 2014 to more than $1 billion. GE Capital strengthened its balance sheet, reduced non-core assets and took portfolio actions to decrease ENI, per the Company’s plan.
Immelt concluded,“GE ended the year with great strength. We are well positioned to achieve our framework for 2014.”
Fourth-quarter and Full-year 2013 Highlights:
Fourth-quarter operating earnings were $5.4 billion, up 16% from fourth-quarter 2012, and operating EPS was $0.53, up 20%. GAAP earnings from continuing operations (attributable to GE) were $5.0 billion, up 16%, or $0.49 per share, up 20% from the fourth quarter of 2012.
Including the effects of discontinued operations, fourth-quarter net earnings attributable to GE were $4.2 billion ($0.41 per share) in 2013 compared with $4.0 billion ($0.38 per share) in the fourth quarter of 2012. This included Grey Zone charges of $0.04 per share, WMC charges of $0.01 per share, and charges for a disposition in Russia of $0.02 per share.
Fourth-quarter revenues increased 3% to $40.4 billion. Industrial sales of $28.8 billion increased 6% compared to the fourth quarter of 2012. GECC revenues of $11.1 billion decreased 5% from last year.
Full-year operating earnings were $16.9 billion, up 5%, from $16.0 billion in 2012, and operating EPS was $1.64, up 9% from $1.51 in 2012. GAAP earnings from continuing operations (attributable to GE) were $15.2 billion, or $1.47 per share, up 4% and 7% respectively from 2012.
Including the effects of discontinued operations, full-year net earnings attributable to GE were $14.1 billion ($1.36 per share) in 2013 compared with $13.6 billion ($1.29 per share attributable to common shareowners) in 2012.
Full-year revenues were $146.0 billion, flat with last year. Industrial sales of $101.0 billion were flat with last year. GECC revenues of $44.1 billion were down 3% from 2012.
Cash generated from GE operating activities in 2013 totaled $17.4 billion excluding $3.2 billion of NBCUniversal deal-related taxes. Cash generated from Industrial operating activities, excluding the NBCUniversal deal-related taxes, totaled $11.5 billion.
The accompanying tables include information integral to assessing the Company’s financial position, operating performance and cash flow.
GE will discuss preliminary fourth-quarter results on a webcast at 8:30 am. ET today, available at ge.com/investor. Related charts are now posted on our website for your review prior to the call.
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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 sovereign debt situations; 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 (GE Money Japan); pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; 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 or to repurchase shares at the planned level; GECC’s ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; 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; our capital allocation plans, as such plans may change and affect planned share repurchases and strategic actions, including acquisitions, joint ventures and dispositions; our success in completing announced transactions and integrating acquired businesses; our ability to complete the staged exit from our North American Retail Finance business as planned; 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.
Contact: Seth Martin
M: 203-572-3567 - E: seth.martin[.]ge.com.