General Electric share price up, Q2 results top estimates driven by industrial growth

General Electric Co reported on Friday better-than-expected revenue and adjusted profit in the second quarter as upbeat performance in its power division offset a continued decline in oil and gas.

The US conglomerate reported a 5% jump in operating profit from its industrial segment to $4.4 billion on the back of flat revenue at $26.9 billion, prompting the company to raise its 2015 goal for industrial operating earnings per share to $1.13 – $1.20 from the previous guidance of $1.10 – $1.20.

“GE had a strong second quarter, with good industrial organic growth and exceptional cash generation,” said Jeff Immelt, Chairman and CEO. “The environment remains one of slow growth and volatility, particularly in growth markets, while the U.S. is gradually improving.”

GE registered an overall net loss for the three months ended June 30th of $1.36 billion, or 13 cents a share, compared to a $3.55-billion profit a year earlier, or 35 cents per share. This was due to a $4.3-billion charge related to the companys planned disposal of financial services assets.

Excluding one-time items and the finance business that GE plans to sell, operating EPS stood at 31 cents, beating analysts projections of 28 cents. Total revenue rose 1.5% to $32.75 billion from $32.26 billion a year ago, also above projections of $28.7 billion.

Fridays financial results are the first since the company announced in April plans to dispose of its financial arm and shift focus back to its core industrial business, which is less volatile and more valued by investors. The conglomerate said dispositions at GE Capital are ahead of plan, having already signed $68 billion worth of sales in 2015, and that it was on track to reach this years planned $100 billion of disposals out of a total $200 billion. GE Capital generated a profit of $218 million during the quarter but booked a $3.5-billion loss on $6.22 billion of revenue as a result of the charges for businesses being held for disposal.

In the industrial business, profit margins rose to 16.2% from 15.5% a year earlier, with four out of seven segments registering a jump in revenue, and five booking a profit.

Earnings at the power and water segment rose 8% to $1.22 billion from $1.13 billion a year earlier, on revenue of $6.80 billion which was also up 8%. This helped offset a 12% drop in profit at the oil and gas division to $583 million from $665 million a year earlier, on revenue falling 15% to $4.06 billion.

Like other equipment suppliers to the energy sector, General Electric has been negatively affected by the passed years steep drop in crude prices, which has forced oil companies to scale back capital expenditures. Nevertheless, GE has underscored its long-term confidence in the unit, saying it will address the decline in the business by cutting costs and relying on its order backlog for exploration and drilling equipment.

Also helping boost overall results, the aviation segment saw profit jump 6% to $1.27 billion on a 3% increase in sales to $6.25 billion, while the transportation unit generated a profit of $331 million, up 23% from a year earlier, on a 9% increase in revenue to $1.42 billion.

General Electric Co traded 0.59% higher at $27.20 per share at 14:35 GMT in New York, marking a year-on-year increase of 2.21% and a year-to-date gain of 7.64%. The company is valued at $272.45 billion. According to CNN Money, the 13 analysts offering 12-month price forecasts for General Electric have a median target of $30.00, with a high estimate of $33.00 and a low estimate of $27.00. The median estimate represents a 10.31% increase from the last price of $27.20.