General Electric Co posted a better-than-expected profit, helped by strong emerging-market demand for heavy equipment and setting the stage for what could be a wave of strong manufacturing earnings reports.
U.S. President Barack Obama tapped GE Chief Executive Jeffrey Immelt on Friday to head a new economic advisory panel in a strong sign of how investor and public opinion has changed about a company that became one of the dogs of Wall Street during the recession.
Shares of the world's largest maker of jet engines and electric turbines rose 7 percent on Friday, hitting their highest level since the thick of the financial crisis in November 2008, and making GE the biggest lift to the blue-chip Dow Jones industrial average.
Investors called the results a sign that the economy was strengthening.
It's the economy at large, said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan, which owns GE shares. That reflects a growing economy and GE is well positioned for that.
A rebound in demand for railroad locomotives and a rise in sales of medical imaging devices helped GE notch a 12 percent rise in orders in the quarter, driving its order backlog -- a key indicator of future revenue -- to $175 billion.
The environment continues to improve, Immelt told analysts during a conference call. The economy can get a little bit stronger every day.
RAISING THE BAR
The results may raise expectations for a wave of earnings reports coming next week from fellow blue-chip industrials Caterpillar Inc, United Technologies Corp, Boeing Co and 3M Co.
GE turning the corner does raise the bar for where you would expect global revenue to come in for any diversified firm, said Morningstar analyst Daniel Holland. I'm a little bit more optimistic than I was coming into the cycle.
Obama toured the company's Schenectady, New York, electric turbine factory, and praised Immelt's leadership.
We think GE has something to teach businesses all across America, Obama told a crowd of about 500 GE workers.
Investors and fellow executives said they were glad to see Immelt tapped by the administration.
What's good for the economic advisory panel might be good for the economy and for GE, said Ryan Allen, a portfolio manager at AMBS Investment Counsel in Grand Rapids, Michigan.
GE's fourth-quarter net income rose to $4.5 billion, or 42 cents per share, from $3 billion, or 28 cents per share, a year earlier.
Profit from continuing operations came to 36 cents per share, above the 32 cents analysts had expected, according to Thomson Reuters I/B/E/S.
Revenue rose 1 percent to $41.38 billion, above the $39.9 billion analysts had expected.
The most exciting thing is the return to organic revenue growth, said Jack De Gan, chief investment officer, at Harbor Advisory Corp in Portsmouth, New Hampshire.
GE's industrial organic revenue, which excludes the impact of acquisitions and foreign exchange, rose 6 percent.
Deutsche Bank analyst Nigel Coe called the results arguably their best quarter since 2007.
Fairfield, Connecticut-based GE recorded 10 cents per share in one-time charges, including $500 million set aside to cover the cost of cleaning up chemicals it had dumped into New York's Hudson River more than three decades ago. That charge was offset by 10 cents per share of one-time gains, including a tax settlement.
After a few years where profits declined at GE and trouble at its finance arm had management on the defensive -- pushing the shares as low as $5.87 in March 2009 -- Immelt is back on the offensive, twice raising the dividend in the past year, resuming share buybacks and returning to the takeover trail.
GE shares closed up $1.31 at $19.74 on the New York Stock Exchange on Friday, adding almost $14 billion to its market capitalization, which reached $210.32 billion.
GE shares have risen almost 11 percent over the past year, roughly in line with the Dow.
(Reporting by Scott Malone, additional reporting by Nick Zieminski, Chuck Mikolajczak, Angela Moon and Edward Krudy in New York and Atul Prakash in London; editing by Gerald E. McCormick, Derek Caney, Tim Dobbyn and Carol Bishopric)