GE second-quarter profit tops forecasts despite volatile economy

(Reuters) - General Electric Co reported second-quarter profit slightly above expectations on Friday, offsetting weaker-than-forecast revenue growth, and said it was finding ways to grow despite a hazy economic outlook.

The largest U.S. conglomerate -- as measured by revenues -- didn't change its full-year profit forecast of double-digit growth, buoyed by strong sales of railroad locomotives and electric turbines.

"We are executing on our growth strategy in the midst of a still volatile global economy," Chief Executive Jeff Immelt said in a statement.

Profit from continuing operations -- which factors out charges related to the company's former U.S. subprime mortgage and Japanese consumer finance businesses -- rose 2.5 percent to $3.66 billion in the second quarter.

Factoring out one-time items per-share earnings were 38 cents per share, above the analysts' average estimate of 37 cents, according to Thomson Reuters I/B/E/S.

GE shares dipped to $19.69 in premarket trading from a $19.80 close on the New York Stock Exchange.

The solid outlook was key for investors, particularly after two days of stronger-than-expected earnings from other industrial companies, including Textron Inc and Honeywell International Inc.

"This is a very good release," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "GE had the perfect opportunity to bring expectations down and blame it on Europe and that would have been the tell-tale move that would have said, 'OK, GE is beginning to suffer here in this environment.' And they didn't do that."

ENERGY A BOOST, EUROPE A WORRY

Sales rose 2.5 percent to $36.5 billion from $35.62 billion, but was shy of Wall Street's expectation of $36.8 billion. The company noted that the strengthening dollar, which has the effect of making foreign sales less valuable, reduced revenue by $900 million in the quarter.

"Revenue was a little lighter than expected, even though earnings beat and they had a strong industrial business," said Cort Gwon, chief strategist at HudsonView Capital Management in New York.

Gwon said he was concerned about how well the company's European business was holding up. "That's a concern for a lot of companies this earnings season. How will austerity in Europe impact multinationals? GE is a microcosm for the concerns we've having about the global economy.

The strongest revenue growth came at its transportation unit, which makes railroad locomotives, where sales rose 27 percent to $1.6 billion. Sales at the heftier energy arm rose 15 percent to $11.9 billion.

GE Capital revenue declined 8 percent to $11.5 billion, reflecting the company's continuing efforts to pare back the operation.

Separately on Friday, GE said it won a 22-year, $600 million contract from U.S. oil major Chevron Corp to maintain compressors and other equipment on Chevron's Gorgon natural gas project off the coast of Australia. GE has already landed orders to sell $1 billion in equipment for the project.

GE has stepped up its presence in the energy sector over the past couple of years, making more than $11 billion in acquisitions and expanding beyond its historic core of making electricity-producing turbines to offer more equipment used in oil and gas production.

GE shares have risen about 10.8 percent so far this year, outpacing the 5.7 percent gain in the Dow Jones industrial average, of which the stock is the sole remaining original component.

(Additional reporting by Lynn Adler and Ryan Vlastelica in New York; editing by Lisa Von Ahn and Jeffrey Benkoe)

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