Showing posts with label GE. Show all posts
Showing posts with label GE. Show all posts

Friday 20 March 2009

GE reassures over profits of finance arm

From Times Online
March 19, 2009

GE reassures over profits of finance arm
Christine Seib, New York

Shares in General Electric (GE) rose almost 7 per cent in morning trading after the conglomerate reassured investors about the profitability of its troubled finance business.

GE, which saw its shares plummet to an 18-year low of $5.87 this month on capital raising and ratings downgrade fears, said that GE Capital was likely to be profitable this year even in a worst-case economic scenario.

The company’s stock was up by 6.9 per cent at $11.03 each by 10.50am as shareholders welcomed the news.

Michael Neal, chief executive of GE Capital, said: "Even in the adverse case we’re probably break-even to slightly profitable".

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Keith Sherin, GE’s chief financial officer, added that the company had run stress tests of GE Capital’s portfolio of business and found nothing that would force GE to raise additional capital.

GE Capital, which sells commercial and personal loans as well as making proprietary investments in real estate, has been hit by the souring property market.

GE has put aside $10 billion against expected losses at the unit, which once accounted for about half of GE’s earnings but has shrunk to less than one-third.

Shares in GE started to rise last week after Standard & Poor’s stripped the company of its AAA credit rating, taking it to AA-plus.

Investors had expected the downgrade to be worse, so took the one-notch demotion as a sign that there was no further bad news to come from the finance business.

http://business.timesonline.co.uk/tol/business/article5939737.ece