General Electric continues its descent into the fourth quarter as oil patch difficulties impacted sales and lowered shares in the company down to their most severe decline in four months.
On a conference call, Chief Financial Officer Jeff Bornstein said after an “extremely difficult” past year, weakness in the oil and gas unit is likely to linger into this year. After announcing fourth quarter revenues for GE that missed analyst estimates, Bornstein said the unit responsible for making drilling equipment and pipes are unlikely to improve until the second half of 2017.
Growth slowed considerably in 2016 as a lagging economy challenged GE to stay afloat. Chief Executive Officer Jeffrey Immelt was pressured to narrow focus to machinery, like gas turbines and engines. In the last two years, Immelt has sold off most consumer and financial businesses. On the conference call, Immelt said GE is facing a “slow-growth an volatile environment.”
Immelt is now looking to further his bet on crude oil by joining the operations with oil field service Baker Hughes Inc. GE would own 62.5% of the company when combined.
According to average estimates compiled by Bloomberg, revenue was estimated at $33.9 billion in the fourth quarter. A statement by the company revealed that revenue fell 2.4% to $33.1 billion. Adjusted earnings dropped to 46 cents per share, in line with analyst estimates.
Nicholas Heymann, an analyst with William Blair & Co., said “I don’t see any signs of big problems, but it was a grind quarter.”
GE reaffirmed a company forecast last month when it announced operating earnings this year will be $1.60 to $1.70 a share. Organic revenue, analysts expect, will increase from 3% to 5%.
Investors remain vigilant as President Donald Trump takes office to see how he will affect GE. The possibility of a corporate tax reform promises to lower the company’s bill. Immelt added that GE might see an improved business climate under Trump’s presidency.