26 Sep 2008

GE slashes profit forecast

6:06 am on 26 September 2008

General Electric has warned that turmoil in global credit markets could drive profit down as much as 12% this year.

Two of the biggest businesses in the company's finance arm, GE Capital, are loans to mid-sized companies and investments in commercial real estate.

GE plans to scale back its financial arm, including selling more than $US10 billion in real estate assets.

However, chief executive Jeff Immelt told investors on a conference call the company was "performing well in a tough environment".

He noted that its industrial operations - which make heavy equipment like jet engines and electricity-producing gas turbines - are on track for 10% - 15% profit growth.

Shares in GE were up about 3% at midday. However, they are down about 31% to date this year.

For the full year, GE forecast earnings of $US19.5 - $US21 billion, compared with its previous expectations of $US22 - $US23 billion.

GE's market value is about $257 billion. Standard & Poor's affirmed the company's credit ratings shortly after the announcement.