Daily News: March 12, 2013

GE Says Infrastructure Earnings Goal to Reach 70%

Commenting on GE Capital in his annual letter to shareholders, GE chief executive Jeff Immelt said, “We are creating a smaller, more focused financial services company – one that has a lower risk profile and adds value to our industrial businesses. We will continue to reduce the size of GE Capital from the $600 billion of assets it was in 2008 to a goal of $300-$400 billion in the future.”

Immelt added, “Over the next few years, we plan for GE Capital to return about $20 billion of dividends back to the parent.” As regarding capital distribution, Immelt said, “We will purposefully reallocate capital from financial services to infrastructure and grow it faster. Our goal is to have infrastructure earnings reach 70% of our total over time.” According to GE’s 2012 annual report, GE Capital contributed about 48% of GE’s total pre-tax profit.

Commenting of the U.S. economy, Immelt said “The U.S. is improving, driven mainly by housing and the consumer, but capital investment remains sluggish. As a result, the U.S. continued its weakest recovery since the 1930s.”

Immelt went on to say that political uncertainty in the U.S. could prompt corporate America to pull back on capital spending. Immelt said, “The U.S. faces more major ‘political storms’ this year: the fiscal situation, repeated debt-limit controversy and tax reform. We fear that this uncertainty will impact capital investment.”