General Electric Co reported better-than-expected earnings, helped by the recovery of its finance arm and a rise in revenue at its industrial units, including a sharp pickup in sales of locomotives.
The world's biggest maker of electric turbines and jet engines, whose shares rose 4 percent in premarket trading, also reported a 12 percent rise in orders, driving its backlog -- a key predictor of future sales -- to $175 billion.
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. The last two or two and a half years, organic revenue growth has been negative, and this is the first quarter that it's flipped positive.
GE's industrial organic growth, which excludes the impact of acquisitions and foreign exchange, rose 6 percent in the fourth quarter.
The largest U.S. conglomerate said on Friday fourth-quarter net income came to $4.5 billion, or 42 cents per share, up 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.
GE is viewed as a bellwether of the global economy due to the breadth and geographic reach of its operations. It competes with some of the world's largest businesses, including Germany's Siemens AG, French industrial group Alstom SA and Swiss engineering firm ABB Ltd.
SIGNS OF HEALTHIER ECONOMY
Given its breadth, the better-than-expected results point to a recovering global economy, an investor said. The news boosted U.S. stock futures in early trading.
It's the economy at large, said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan.
If you look at developing nation growth, GDP is expected to grow 7 to 9 percent and in developed nations it's more modest but still expected to be in the 2 to 3 percent range. That reflects a growing economy and GE is well positioned for that.
Chief Executive Jeffrey Immelt also noted that the company's finance unit posted a sharp improvement in the quarter, growing profit more than 10 times to $1.06 billion.
Strong performance at GE Capital was also encouraging, said Immelt, who U.S. President Barack Obama has named head of a new economic advisory panel, GE shares rose 4 percent to $19.21 in pre-market trading.
The 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.
U.S. regulators on Tuesday approved GE's plan to sell a 51 percent stake in GE's NBC Universal unit to No. 1 U.S. cable operator Comcast Corp, in a move that sets the stage for the conglomerate's eventual exit from the media business.
The company expects its tax rate to rise this year, in part due to gains from the NBC sale.
GE shares have risen almost 11 percent over the past year, roughly in line with the Dow Jones industrial average.
(Reporting by Scott Malone, additional reporting by Nick Zieminski, Angela Moon and Edward Krudy in New York and Atul Prakash in London; editing by Gerald E. McCormick and Derek Caney)