GE GE Aerospace

By Joshua Jamerson and Ted Mann 

General Electric Co.'s oil and gas business continued to weigh on revenue growth in the latest quarter, and the industrial giant said it would increase its stock-buyback program by $4 billion after disappointing Wall Street this year.

The company also said it is continuing to operate in a "slow growth and volatile environment," and shares fell 1% to $28.77 in premarket trading. The stock has fallen 11% in the past three months through Thursday's close.

GE said organic orders fell 6% amid a focus toward industrial businesses and away from banking.

GE's power, aviation and renewable energy segments drove industrial revenue growth, as transportation and in oil and gas continued to post declines.

The company is under increasing pressure to show results from its industrial business after its decision to largely exit financial services last year. A little more than one year ago, activist investor Trian Fund Management LP announced a $2.5 billion stake in the company and urged GE to take on $20 billion in leverage in order to buy back its own shares. Trian also warned GE against all but bolt-on acquisitions, citing what it said is a poor track record on past deals.

GE says it is ahead of its targets for share buyback, but hasn't yet boosted its borrowing to make either a large-scale share repurchase or a significant acquisition, as some investors have hoped.

Oil-and-gas revenue fell 25% in the latest quarter as it grapples with depressed oil prices, and segment profit fell 42%. Meanwhile, renewable energy revenue rose 66% and revenue from power, its largest industrial segment, rose 37%.

Over all for the September quarter, GE reported a profit of $2.03 billion, or 22 cents a share after the payout of preferred dividends, compared with $2.51 billion, or 25 cents a share, a year ago. Excluding items, the company earned 32 cents, compared with 29 cents a year ago. Analysts polled by Thomson Reuters projected 30 cents a share.

Revenue rose 4.4% to $29.27 billion. Analysts had expected $29.64 billion.

GE said its total industrial profit slipped 4.6% to $4.32 billion in the quarter.

Earlier this year, the conglomerate's lending arm, GE Capital, successfully shed its designation as a "systemically important" financial institution -- a label that had required the company to submit to stricter rules and supervision by the Federal Reserve -- after months of shedding assets of the business, long seen as a distraction by investors who believed it dragged on the company's share price. GE Chief Executive Jeff Immelt on Friday said in prepared remarks that its GE Capital asset sales are "substantially complete."

The company has already bought back $13.7 billion of its own stock through the first half of the year, and the additional $4 billion in share repurchases announced Friday boosts its buyback target for the year to $22 billion. The company has a market value of roughly $260 billion.

So far this year, GE's performance has disappointed. It is contending with a raft of Wall Street downgrades, a slipping stock price and weak revenue in the first six months of the year. This contrasts sharply with 2015, when Mr. Immelt won praise from analysts and investors for selling most of GE's finance operation.

The stock rose 24% in 2015, trading above $30 for the first time since 2008. Shares are down 6.7% so far in 2016.

Write to Joshua Jamerson at joshua.jamerson@wsj.com and Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

October 21, 2016 07:57 ET (11:57 GMT)

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