GE profit meets expectations

BOSTON (Reuters) - General Electric Co (GE.N) posted a 4 percent rise in net profit on Friday, matching Wall Street expectations, with strong demand for heavy equipment from outside the United States offsetting the effects of a slowing domestic economy.

The second-largest U.S. company by market capitalization said profit rose at all of its units but health care, which was weighed by a U.S. regulatory change.

With global credit markets in turmoil and most major Wall Street banks suffering big losses, GE saw profits rise at its commercial finance and GE Money consumer finance arms. Executives said it had been able to demand higher interest rates for loans.

GE confirmed its forecast of "at least" 10 percent 2008 profit growth overall.

Its shares, which had fallen sharply on Thursday amid a broad U.S. sell-off, bounced back Friday, up 4 percent.

Fourth-quarter profit at GE increased to $6.7 billion or 66 cents per share, from $6.44 billion, or 62 cents per share, a year earlier. Profit from continuing operations was 68 cents per diluted share, meeting Wall Street expectations, according to Reuters Estimates.

'WELL POSITIONED'

"We think we're very well positioned in the world that we see today," Chairman and Chief Executive Jeff Immelt said on a conference call with investors.

While saying he saw "no sign" of a slowdown in demand for infrastructure products, Immelt acknowledged, "The U.S. economy has slowed. Housing has been tough. The consumer is feeling some strain right now."

Keith Sherin, the chief financial officer, said in an interview the company aimed to cut $1 billion in costs from its supply chain this year, through raising prices, moving to lower-cost locations and redesigning products, to prepare for a slowing economy.

But, he noted, even as the U.S. economy shows signs of weakening, activity remained robust for GE in the Middle East, Asia, Latin America and Eastern Europe.

"Not everything is gloom and doom," Sherin said. "There is a big global economy out there, and there is an awful lot of economic action."

The Fairfield, Connecticut-based company said revenue came to $48.59 billion, up 17.7 percent from $41.28 billion a year earlier, while analysts had expected $47.25 billion.

"The revenues came in higher than expected, infrastructure came in strong," said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group, which counts GE among its holdings. "All the segments performed in line or better than expected."

For the first time, GE generated more than half its annual revenue outside the United States.

DOMESTIC 'WEAKNESS'

"Clearly foreign operations delivered the bulk of the strength in the quarter. I think that's a seminal event," said Tim Ghriskey, chief investment officer at Solaris Asset Management, which holds GE shares. "It also indicates there is weakness on the domestic side."

The strongest profit growth -- 26 percent -- came from GE's infrastructure arm, which makes products including jet engines and electricity-producing turbines. Health care was down 4 percent in the quarter, in part due to a U.S. law changing the way medical equipment is reimbursed.

GE sees first-quarter 2008 profit from continuing operations at 50 cents to 53 cents per share. It said it expects profit to rise at five of its six units, but warned profit at GE Money could be down 20 percent in the quarter.

Immelt said GE's plan to sell its private label credit card business or create a joint venture for it was on track.

"We've had some expressions of interest," he said.

GE also said in a filing with the U.S. Securities and Exchange Commission that an internal review of how its aviation unit accounted for profits found some errors that resulted in the lowering of its 2002 net profit by $585 million and raising profit in the following four years.

Shares of GE, which trails Exxon Mobil Corp (XOM.N) in market capitalization, were up $1.35 to $34.56 on the New York Stock Exchange. On Thursday, they fell to $32.92, their lowest point since August 2006.

The shares, which ended last year basically flat, are down 7.1 percent so far this year, less of a drop than the 7.8 percent slide in the Dow Jones industrial average (.DJI) and the 8.9 percent decline for the Standard & Poor's 500 index