General Electric Co. on Friday reported a third-quarter profit of $2.03 billion.
The Boston-based company said it earned 22 cents per share. Earnings, adjusted for nonrecurring costs and to account for discontinued operations, were 32 cents per share.
The results topped Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 31 cents per share.
The industrial conglomerate posted revenue of $29.27 billion in the period, which missed forecasts. Five analysts surveyed by Zacks expected $29.84 billion.
GE's stock price has declined roughly 7 percent since the beginning of the year, while the Standard & Poor's 500 index has increased almost 5 percent. The stock has increased 1 percent in the past 12 months.
General Electric may not grow this year, analysts said, as low oil prices, a strong dollar and a sluggish economy crimp demand for oil-field equipment and locomotive parts, a setback for Chief Executive Officer Jeffrey Immelt as he pursues a sharpened focus on manufacturing.
GE cut its outlook for sales growth. The company projected the figure would be flat to up 2 percent this year, after previously forecasting an increase of as much as 4 percent.
GE is struggling to demonstrate the benefits of a corporate transformation in which Immelt has refocused on making power turbines, jet engines and oil-field equipment while selling off financial and consumer operations. GE rallied last year, but the stock has been weak in 2016 as investors question whether the company can sustain the momentum amid global head winds.
"GE's stock has suffered from increasing investor skepticism heading into the quarter," Steven Winoker, an analyst at Bernstein, said in a note. "While growth this quarter inflected positive, it was below our expectations, and the lowered organic growth guide for the year again calls into question the company's ability to hit" fourth-quarter targets.
Organic growth is the process of business expansion by increased output, customer base expansion, or new product development.
The stock price dropped 9 cents Friday to close at $28.98 in New York.
"Notwithstanding a really tough macroeconomic backdrop, I thought the performance in the quarter was pretty good," Chief Financial Officer Jeff Bornstein said in a telephone interview. Excluding the oil and gas unit, "our organic revenue growth was up 6 percent in the quarter, 4 percent year to date."
Orders increased 16 percent in the third quarter as GE looked to pad its backlog and recover from a weak first half. The figure fell 6 percent on an organic basis, which excludes the effects of acquisitions and currency exchange, as oil and transportation demand declined.
Sales in the oil and gas unit fell 25 percent in the quarter, the most in the company's industrial divisions, as GE navigated the enduring slump in the global crude market.
"Our outlook for oil and gas has worsened," Immelt said during a conference call, adding that the company has a "realistic" view about the industry. "But don't be mistaken: We still think this is a core GE business."
Revenue climbed 37 percent in the power division and increased 5 percent in GE Aviation. GE Healthcare sales rose 5 percent as orders jumped 6 percent organically, logging its third-straight quarter of earnings and revenue growth.
Digital and software orders rose 11 percent, GE said. The company sees software operations as a business that can enhance the value and productivity of industrial equipment.
GE on Friday boosted its share buyback to about $22 billion from $18 billion. The company has also pursued several acquisitions in recent months to bolster its digital business, supply chain and manufacturing capabilities. The company said last week that it would buy LM Wind Power, a maker of turbine blades, for $1.65 billion. LM Wind Power operates a blade production factory at the Little Rock Port.
During the quarter, the 124-year-old company relocated its headquarters to Boston from a longtime suburban home in Fairfield, Conn., a move intended to bolster its image as a tech-savvy firm and help recruit engineering talent.
Information for this article was contributed by The Associated Press and by Richard Clough of Bloomberg News.
Business on 10/22/2016