GE financial services segments’ profit drops

Impairments and an inability to complete
asset sales saw the net earnings for global conglomerate, GE and
its overall financial services segments drop year-on-year for the
first quarter of 2008. Net earnings for the Group fell two per cent
to £2.15bn, and net earnings for the overall financial services
segments fell by £1.5bn, 20.8 per cent to £1.2bn for the same
period. However, the financial services segments did see a three
per cent rise in revenues to £9bn for the first three months of
2008.
The Commercial Finance division, which includes lending products
such as equipment leasing and asset finance, reported a hike of
seven per cent to £4.4bn, but segment profit was down 19.6 per cent
to £0.6bn.
Capital Solutions, which includes equipment leasing and lending and
inventory finance, saw its revenues grow 8.1 per cent to £1.8bn and
profit increase by a marginal one per cent to £200m. GE Money, the
consumer finance division, which performs consumer lending, also
reported a revenue increase of seven per cent to £3.2bn for the
first quarter of 2008, but segment profit was down £0.6bn, 18.6 per
cent to £500m for the same period.
Commenting on the decline, CEO Jeff Immelt said: “Our primary
shortfall was a decline in financial services earnings. We knew the
first quarter was going to be challenging, but the extraordinary
disruption in the capital markets in March affected our ability to
complete asset sales and resulted in higher mark-to-market losses
and impairments. Our inability to complete these asset sales and
higher mark-to-market losses and impairments impacted earnings by
$0.05 (£0.25) per share.”