General Electric Co’s problems with oil persisted during the final quarter of 2016, denting its sales and pulling down shares to their largest decline over the past four months.
Persistent weakness in the gas and oil unit, which manufacturing pipes and drilling equipment, will likely linger into 2017 following a very difficult 2016, said CFO Jeff Bornstein during a conference call with analysts.
Improvement is not likely until sometime during the second six months of 2017, said the CFO after GE posted revenue for the fourth quarter that came up short of estimates by analysts.
The results helped to underscore the challenges GE has in finding footing after a sluggish economy kept growth down during 2016 and pressured CEO Jeffrey Immelt’s efforts of sharpening company focus on machinery like jet engines and gas turbines.
Immelt, who has sold off the majority of financial and consumer businesses at GE the past two years, wants to deepen the bet he has made on crude through combining the oil operations and Baker Hughes.
GE faces a volatile and slow growth environment, said the CEO during the call with analysts.
Shares of GE were down Friday after the financials report by 2.2% on Wall Street. That represented the largest drop in share price for GE in over four months.
GE has gained over 9% the past 12 months, in comparison to an advance of 22% for the S&P 500 Index.
Its revenue was down over 2.4% to just more than $33.1 billion for the quarter. Analysts were expecting revenue of $33.9 billion. Adjusted earnings were down ending the quarter at 46 cents per share, which matched estimates.
Orders for GE were up 4.3% during the three-month period, but were down on an organic basis by excluding Alstom SA assets that came through an acquisition.
Investors are now watching to see how the new U.S. President Donald Trump is going to affect GE, including possible reform in corporate taxes that might bring down the bill of the company.
During the final quarter of 2016, GE’s effective tax rate was negative 2%. Immelt said that GE might benefit from an improved business climate and new investment in infrastructure under Trump.
GE met with policy makers and lawmakers to talk about what elements might be included in an overhaul of taxes, including a transition tax of a reasonable figure for companies that are looking to repatriate cash that is sitting overseas.