General Electric Co (NYSE:GE) reported a 13-percent jump in quarterly net income Friday on improved sales of its jet engines and oil and gas equipment, and said it was targeting the initial public offering of its private-label credit-card business for the end of the month.
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The U.S. conglomerate has been planning a partial IPO of the North American retail finance business, to be called Synchrony Financial, as part of a plan to exit the business and slim down its overall GE Capital unit.
GE expects a 15 percent offering would be worth about $3.1 billion at the mid-point of the IPO, according to a company presentation. It plans to retain about $17 billion of the business, with a full separation targeted for late next year.
Shares of GE, whose quarterly profit matched Wall Street targets, rose 1.7 percent in premarket trading.
The spin-off is a key part of Chief Executive Officer Jeff Immelt's plan to boost GE's earnings contribution from its industrials businesses to 75 percent by 2016, from 55 percent last year. Toward that end, GE last month agreed to buy the power turbine and other energy assets of France's Alstom for $16.9 billion, its biggest-ever deal.
"GE has always been a steady re-allocator of portfolio assets," said Tim Ghriskey, chief investment officer with Solaris Asset Management, which owns GE shares. "It's nice to see that pick back up ... To me, that's what can really move the stock."
GE's second-quarter net income rose to $3.55 billion, or 35 cents per share, from $3.13 billion, or 30 cents a share, a year earlier.
Excluding items, operating earnings of 39 cents a share matched the average estimate of analysts, according to Thomson Reuters I/B/E/S.
Revenue rose 3.4 percent to $36.23 billion, slightly below the $36.3 billion expected by analysts.
Sales rose 15 percent for its aviation segment, and 20 percent for its oil and gas unit.
Overall, revenue for GE's industrial businesses rose 5 percent, excluding acquisitions, and the company kept its forecast of organic industrial revenue growth of 4 percent to 7 percent for the year.
GE's profit margin for its industrial businesses, a closely watched barometer by Wall Street, expanded 0.2 percentage point to 15.5 percent.
The company's backlog of equipment and service orders rose 10 percent to $246 billion. Orders for new equipment in the quarter dipped 3 percent, after also declining in the first quarter, although service orders rose 14 percent.
GE last month prevailed in a two-month battle to acquire Alstom's power assets, fending off initial French government resistance and a bid from rival industrial giants.
The deal is expected to close in 2015 and add 6 cents to 9 cents per share to earnings in 2016, the company said Friday. Analysts expect GE to earn $1.97 per share in 2016.