General Electric posted a 12 percent rise in overall industrial profits on Thursday, as strength in its businesses selling gas turbines, jet engines and oil industry equipment offset weakness in healthcare and transportation.
GE, which is increasingly focusing on its traditional manufacturing businesses over its finance unit, posted an 8 percent increase in industrial revenue, even as overall company revenue fell slightly short of Wall Street's target.
GE shares rose 2 percent to $26.65 in premarket trading, as profit also edged past analyst estimates. (Click here for the latest quote.)
"The big story is the organic revenue growth," said Tim Ghriskey, chief investment officer of Solaris Asset Management, which owns GE shares. "It really shows the return to an industrial emphasis is paying off, and where the company is focusing."
GE Chief Executive Officer Jeff Immelt wants to focus the company even more on manufacturing of large industrial products as he reduces the company's dependence on its GE Capital finance unit. Immelt is also seeking to improve profit margins and slash administrative costs at the 307,000-employee company.
"The environment is consistent with our expectations, with a positive bias," Immelt said in a statement.
First-quarter net earnings fell to $3 billion, or 30 cents per share, from $3.53 billion, or 34 cents per share, a year ago, when the company's results were boosted by its sale of NBCUniversal. (NBCUniversal, owned by Comcast, is the parent of CNBC and CNBC.com.)
Excluding one-time items, operating earnings of 33 cents topped analysts' average estimate by a penny, according to Thomson Reuters I/B/E/S.
Revenue fell 2.1 percent $34.18 billion. Analysts were looking for $34.36 billion.
Revenue in its two largest industrial segments, aviation and power and water, each rose 14 percent, while its oil and gas division posted a 27 percent increase.
As expected, GE's transportation segment that makes locomotives was weak due to a poor environment for the mining sector. But its health care unit, which makes an array of MRI and other scanning machines, saw revenue slip 2 percent where some analysts were expecting growth.
"Health care was pretty weak," said Perry Adams, a portfolio manager at Northwestern Bank.
GE's profit margins for its industrials businesses, a closely watched measure, improved to 13.4 percent from 12.9 percent a year earlier.
That margin improvement was "actually a little shy of what I would have expected," said Jack DeGan, chief investment officer at Harbor Advisory Corp., which owns GE shares.
Still, DeGan said, "the thing that surprised me was that organic growth was 8 percent when they were targeting for the year, 4 to 7 percent. To do that in the environment that we're in, indicates that as a whole they operated well in the first quarter."
GE's backlog of orders for everything from oil pumps to jet engines and turbines stood at $245 billion. Infrastructure orders for the quarter were $23.7 billion, unchanged from a year ago, disappointing some analysts.
GE backed its previous major 2014 financial targets, including the expectation of industrial profits growing by at least 10 percent.
Through Wednesday, GE's shares had declined about 7 percent this year, underperforming shares of industrial conglomerate rivals and the broader U.S. markets.