UPDATE 2-GE Q3 hit by finance arm; investors cheer record backlog
Oct 18 (Reuters) - General Electric Co said on Friday that third-quarter profit and revenue fell, mainly due to its shrinking finance business and the negative effects of foreign currency.
However, the U.S. industrial conglomerate posted a record backlog of orders and said earnings rose at six of its seven industrial businesses.
Chairman and Chief Executive Jeff Immelt noted the results were "were very strong in an improving global business environment."
Wall Street looked beyond the slight decline in quarterly revenue and pointed to GE's improving profit margins and growing order demand for everything from jet engines and turbines to oil pumps. Shares rose 2.1 percent to $25.28 in premarket trade.
"It's slow but steady progress at GE, and that's a good thing," said Tim Ghriskey, chief investment officer at Solaris Asset Management, which owns GE shares.
Net income fell to $3.19 billion, or 31 cents per share, from $3.49 billion, or 33 cents per share, a year earlier.
Excluding one-time items, earnings of 36 cents per share topped the average estimate of analysts by a penny, according to Thomson Reuters I/B/E/S.
Revenue fell 1.5 percent to $35.7 billion. Analysts looked for nearly $36 billion.
GE said the negative impact of foreign currency took a $132 million toll on revenue.
Among GE's seven industrial segments, its oil and gas and aviation lines posted revenue increases of 18 percent and 12 percent, respectively, offsetting a 10 percent decline in its power and water business that makes a variety of turbines.
The company's accumulated backlog of service and equipment orders for items such as jet engines and turbines grew to $229 billion, up $6 billion from the second quarter.
GE said it was on track to reach its target of expanding operating profit margin for its industrial businesses to 15.8 percent this year from 15.1 percent in 2012.
"Industrial margins, which is really an earnings driver, were much stronger than expected," said Jack Degan, chief investment officer at Harbor Advisory Corp, which owns GE shares.