Daily News: December 18, 2012

GE Capital YE/12 ENI Shrinks $217B From 2007 Peak

At the company’s annual outlook meeting with investors and analysts, GE chief executive Jeff Immelt said, “Clearly, there has been an investment pause in certain industries,” and added, “We’ve definitely seen a slowdown in the fourth quarter.”

In his presentation Immelt said the U.S. conglomerate aims for a long-term earnings contribution from GE Capital of around 30% as it continues its efforts to shrink the finance unit. GE Capital contributed about 32% of GE’s earnings in 2011, and about 35% through the first nine months of 2012.

Immelt noted that GE Capital is expected to finish 2012 with less than $420 billion in ending net investment (ENI), down from $637 billion at its peak in 2007. Immelt indicated that the long-term scale of the business was seen at having an ENI between $300 billion and $400 billion. The finance unit has around $75 billion in non-core assets that are being run off.

GE Capital is expected to generate in excess of $20 billion of cash during the 2013-2015 period and achieve returns of 11% to 14%. In his forecast for 2013, Immelt indicated that GE Capital’s earnings will be at or above 2012 levels with the business driven by mid-market growth with originations at high returns as it continues to rebalance its portfolio to achieve a lower ENI.

To access the PDF of the GE presentation, click here.