General Electric, with the fallout from the financial crisis receding, is finally starting to look like what it is -- the nation's largest industrial company.
Since the credit crunch hit, GE's industrial business has been overshadowed by the travails, sell-offs and gradual recovery of the company's big finance arm, GE Capital. Earnings growth was defined as GE Capital pulling itself off the mat and shedding bad loans and troubled subsidiaries, while the company's industrial businesses were generally posting sluggish results as customers put off major investments.
But the wheel is turning at GE, and its first-quarter financial results Friday point to the transition.
The company's earnings slightly surpassed Wall Street's expectations, but the most noteworthy detail was that revenue in the industrial side of its business grew by 14 percent. Ignoring the contributions from acquisitions, the industrial growth rate was still a solid 11 percent.
"That's the strongest industrial growth since the crisis," Jeffrey Immelt, the company's chief executive, said in a conference call with analysts.
GE's finance business, though shrunken, continues to mend. In the first quarter, even its long-troubled commercial real estate unit returned to profitability, for the first time since the third quarter of 2008.
There are weak spots in the company's broad collection of businesses. Financial turmoil in Europe continues to drag down sales of some industrial products, like medical imaging equipment. Profits in its household appliance business fell 11 percent, held down by the struggling housing market.
Yet overall, Immelt said, the first quarter provided reason for optimism.
"Everything we saw supports our expectation of double-digit earnings growth for both the industrial business and GE Capital," he said.
GE shares closed up 22 cents, or 1.2 percent, at $19.36 a share Friday.
The revenue for the company as a whole fell 8 percent from the year-ago quarter, to $35.2 billion.
The company's net profit fell 12 percent to $3 billion, compared with $3.4 billion in the year-ago quarter.
Operating earnings for the quarter, which excludes one-time charges for business sold at a loss and gains from asset sales, increased 1 percent, to $3.6 billion, or 34 cents a share. That was just ahead of Wall Street's forecast of 33 cents a share.
The 14 percent growth in the industrial business came from a range of big-ticket manufactured goods, including jet engines, railway locomotives, power generators, medical-imaging equipment and even wind turbines. The wind business, battered by the recession and fierce international competition, is rebounding this year, helped by state mandates for clean energy and federal tax credits that expire this year.
"Most of GE's key markets are recovering, order rates are picking up and it seems that pricing on those orders is improving as well," said Steven Winoker, an analyst at Sanford C. Bernstein & Co.