GE Posts Higher Net, But Warns on Europe

General Electric Co. (GE) was able to generate a fifth of its revenue last year from Europe, but it has begun to notice a decline in orders since last quarter due to the slow growth of the European economy. The lowering in orders is also due to delays in projects in various European countries. However, overall, GE has been performing well because they are able to cut costs and restructure their system to produce at an optimal level. Their first-quarter profits rose 16%, which was above analysts’ expectations. In addition, they are also lowering their expected performance to “single to double digit growth.” The Chief Executive Jeffrey Immelt plans to construct a plan that will stimulate growth within the company. Failure to do so would lower his pay because his paycheck depends on the company’s performance. On another note, Immelt has confidence in GE’s performance in the second half of the year because he predicts that Middle East’s gas turbine orders will increase.

Lowering of industrial orders may be due to a decline in the number of infrastructure projects. Europe seems to be slowing down in terms of expanding and building. The conglomerate’s performance is an indicator of the economy’s performance because of the segments it focuses on.

 

Written By: Melody Mark

Source: Sechler, Bob. “GE Posts Higher Net, But Warns on Europe.” The Wall Street Journal. Dow Jones & Company, Inc., 20 Apr. 2013. Web. 21 Apr. 2013.

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