General Electric Co. (GE) said Friday that oil is priced at a level attractive for its myriad businesses, strong enough to spur new energy investments but not so high that it crimps the broad economy.
"Above $60 (a barrel), the projects that invest in new (energy) production and efficiency get pretty good paybacks," Chief Financial Officer Keith Sherin said in an interview Friday. "That's the feedback we get from customers" for GE's energy-related products.
GE's energy infrastructure division was its only segment to show second-quarter profit growth. GE reported Friday that earnings in the unit climbed 13% in the quarter, to $1.79 billion.
Sherin said oil between about $60 and $70 a barrel isn't so high that it puts too much of a strain on customers for GE's non-energy products, such as airlines. That was the case last year, he noted, when oil spiked above $140 a barrel.
Oil recently was trading at about $63 a barrel.
"Right now, oil is at a pretty good level for GE," Sherin said.
The Fairfield, Conn., conglomerate is viewed as a barometer of the broad economy because of its far-flung operations, ranging from aircraft engines and washing machines to media content and oil-and-gas gear.
Separately, Sherin said Friday that GE may spend about $2 billion on restructuring over the next 18 months as it works to cut expenses. He said the restructuring efforts are projected to pay for themselves after two years through lower costs.
"These are additional cost-reduction opportunities that we are evaluating," Sherin said, adding that the company may not enact all of them.
He declined to specifically detail the potential cost-reduction efforts. But he said they include possible job reductions and consolidations of facilities, as well as investments in information technology.
The restructuring targets are spread across the company, he said, including its GE Capital finance arm and its industrial units. Sherin noted that GE enacted about $300 million in after-tax restructuring in the second quarter.
-By Bob Sechler; Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com
Bilibala comments:
I think oil price will stay between US$60-75 per barrel until everyone confirm the recession is going to be over, once it happened, oil price will go up to at least US$100.
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