General Electric Co is returning to good, solid earnings growth and plans to raise its dividend at least by 2011, chief executive Jeff Immelt told investors on Wednesday.
The clouds are breaking and the forecast ahead of us is promising, Immelt told the annual meeting of the largest U.S. conglomerate in Houston, where the company has substantial operations related to the oil and natural gas industry.
The world's largest maker of jet engines and electric turbines believes it will take renewed investment by businesses, more than just consumer spending, to drive the U.S. economy out of its worst downturn since the Great Depression.
Typically, in a recovery, the consumer might be 70 percent of the tail wind, if you will; and I just don't think the consumer is going to be as much, Immelt told reporters ahead of the meeting.
He said GE expects to add jobs in the United States over the next few months.
DIVIDEND GOING UP 'SOON'
The Fairfield, Connecticut-based company looks for profit growth to resume next year. It cut its dividend 68 percent during the credit crunch and conducted company-wide cost-cutting that reduced its headcount by about 26,000 to about 304,000 people worldwide.
About a dozen GE retirees gathered outside the meeting to call on it to increase the dividend and their pensions.
For years, it was the message of the company that in addition to your pension, you were supposed to be saving, buying GE stock, and that you were going to get double-digit dividend increases, said Kevin Mahar, 67, of Lynn, Massachusetts, who worked at GE's turbine and aircraft engines during his career with the company.
Every GE retiree I know was counting on the dividend to supplement their pension. It's been a big hit for them, said Mahar.
Several shareholders also asked about the dividend during the meeting.
I know how important the dividend is. Earnings growth is reappearing for GE. Your dividend is going up again soon, Immelt said. Pressed for more specifics, he said It'll be at least '11.
RETURN TO ITS ROOTS
The financial crisis and recession took a heavy toll on GE, bringing nine straight quarters of profit declines and briefly pounding its shares to 18-year lows.
Immelt said the company has learned profound lessons from that experience and is determined to streamline itself into a simpler business focused on its core industrial businesses, supported by a smaller finance arm.
We're an industrial company first, said Immelt, who has led efforts to scale back the GE Capital finance arm and negotiated a deal to sell the company's NBC Universal media business to No. 1 U.S. cable operator Comcast Corp . A simple focus on infrastructure and financial services we think is going to be critically important as we go forward.
Buying back the preferred shares GE sold to Warren Buffett's Berkshire Hathaway Inc is also one of the company's top priorities.
GE shares were up 1.6 percent to $18.99 in early afternoon trading on the New York Stock Exchange.
(Reporting by Scott Malone, additional reporting by Eileen O'Grady, editing by Gerald E. McCormick, Dave Zimmerman and Tim Dobbyn)