General Electric Co. (GE:US) projected accelerating sales and profit growth at its manufacturing units next year as Chief Executive Officer Jeffrey Immelt moves ahead with a plan to cut back the company’s lending business.
Earnings from GE’s industrial divisions, which make products ranging from jet engines to oil-field equipment, will grow at a “double digit” pace in 2014, according to a presentation yesterday to analysts and shareholders in New York. Revenue from those units, excluding the effect of acquisitions, will expand by as much as 7 percent.
GE will have to rely more heavily on manufacturing after divesting its lucrative consumer-finance unit, a process set to start next year. Immelt has pledged to expand the share of GE’s profit coming from industrial businesses to 70 percent by 2015, compared with about 55 percent this year.
“We stand here going into 2014 as an incredibly strong company,” Immelt said at the meeting. “U.S. economic growth will be ‘‘strong enough for us to do what we need to do’’ next year.
Margins in GE’s manufacturing units will top 17 percent by 2016, Immelt said yesterday. That’s up from a company forecast of about 15.8 percent this year and 15.1 percent in 2012.
Last quarter, GE, the world’s largest maker of locomotives and jet engines, posted a 3 percent jump in revenue from industrial operations even as its U.S. home market was gripped by slow growth.
Company executives spelled out plans in November to exit the North American consumer lending business, which provides store credit cards for retailers from Amazon.com Inc. to Wal-Mart Stores Inc.
As much as 20 percent of the unit will be sold in a 2014 initial public offering, GE said in a Nov. 15 filing with the U.S. Securities and Exchange Commission. In a second step, the remaining shares will be distributed to GE stockholders in a tax-free transaction. Immelt said he’d consider further divestitures at GE Capital.
GE climbed 1.4 percent to $27.41 at the close in New York yesterday. The shares climbed 31 percent this year, compared with a 27 percent gain for the Standard & Poor’s 500 Index.
The Fairfield, Connecticut-based company affirmed its 2013 forecast for industrial profit growth at as low as a ‘‘single-digit” pace on so-called organic revenue that’s near 2 percent.
To contact the reporter on this story: Tim Catts in New York at email@example.com
To contact the editor responsible for this story: Ed Dufner at firstname.lastname@example.org