Energy markets drag GE’s earnings, profit
In his final days atop General Electric Co., Jeffrey R. Immelt still can’t throw off oil’s stink.
In his farewell earnings report, the chief executive ended his 16-year tenure by telling Wall Street that GE’s earnings are likely to be disappointing the rest of this year. The culprit: sputtering energy markets.
It was the latest setback for a chief executive who never could win over investors and came under pressure this year from activist shareholder Trian Fund Management.
Oil has become a source of headaches for GE investors as well as a symbol of Immelt’s efforts to find a path forward for a signature U.S. company. The departing chief executive built up the crude business by spending billions on acquisitions before prices tumbled and customer demand for oil field equipment dried up. He closed a deal this month to merge those assets with Baker Hughes, but GE is hardly exiting the industry: It retained a majority stake in the combined entity.
GE’s reliance on oil — along with power generation, renewable energy and aviation — became more pronounced under Immelt as he sold off finance and consumer operations. It’s now the job of John Flannery, a GE veteran set to succeed Immelt on Aug. 1, to decide the future composition of the company.
With the crude and power markets weighing on GE’s results, adjusted earnings are likely to be near the bottom of the company’s previous forecast of $1.60 to $1.70 a share, GE said Friday.
Second-quarter adjusted earnings fell to 28 cents a share, GE said. That exceeded the 25 cent average of analysts’ estimates compiled by Bloomberg. Sales declined 12 percent to $29.6 billion, compared with $29.2 billion expected by analysts.
Revenue rose 5 percent in the power division as profit slid 10 percent. Sales fell 3 percent in GE Oil & Gas, while profit in the unit plunged 52 percent.
— Bloomberg News
Bank of America picks Dublin for E.U. base
Bank of America has chosen Dublin as its European Union base once Britain leaves the bloc, its CEO said Friday.
During a visit to the Irish capital, Brian Moynihan said the bank would add to the 700 staff currently employed there, but declined to provide details. Bank of America has about 4,500 staff in London.
Many international banks currently use London as a base for business across the 28-country EU. When Britain leaves the bloc in about two years, they could lose automatic rights to do business in the remaining 27 E.U. countries if they don’t set up a base there.
So far, several major banks have opted for Dublin and Frankfurt, Germany, to be ready to service clients across Europe, no matter what outcome the Brexit talks yield.
“Dublin is the home of more of our employees than any other European city outside of the U.K.,” Moynihan said Friday. “We will move roles not only to Dublin but to other E.U. locations, with the focus on how we can best support our clients in these markets.”
— Associated Press
Also in Business
The U.S. Department of Labor on Friday ordered Wells Fargo to pay $575,000 and to rehire a whistleblower the bank had dismissed in September 2011 after the former employee raised concerns over the opening of customer accounts without their knowledge, the agency said in a statement. The name of the whistleblower was not disclosed. Representatives for the bank did not immediately respond to questions. Wells Fargo was fined last year for opening as many as 2.1 million customer accounts without their knowledge over several years to meet aggressive sales targets.
Ford is fighting the latest expansion of the recall on Takata air bag inflaters. Earlier this month Takata filed documents with the U.S. government adding 2.7 million vehicles to the recall from Ford, Nissan and Mazda. All have inflaters with a drying agent that previously were thought to be safe. But the National Highway Traffic Safety Administration has said that Takata tests showed the inflater propellant can degrade and will pose a safety risk if the inflaters aren’t replaced. Nissan agreed to recall about 515,000 Versa cars, but Ford and Mazda filed petitions to avoid a recall. Takata inflaters can explode with too much force and spew shrapnel into drivers and passengers. At least 17 people have died and more than 180 have been injured because of the problem.
A group of Democrats in Congress urged the U.S. Department of Justice and Federal Trade Commission in a letter this week to conduct a more in-depth review of online retailer Amazon.com’s plan to buy grocer Whole Foods. The lawmakers asked that the review include consideration of what effect the $13.7 billion deal could have on access to healthy foods in “ food deserts” where residents may have limited access to fresh groceries. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)
— From news services