General Electric looks for sharp cut in corporate tax rate under Prez Trump

For sales of medical equipment to suffer if Congress delays changing US healthcare laws

General Electric (GE) Co is seeking a sharp cut in corporate tax rates under President Donald Trump but is bracing for US sales of medical equipment to suffer if Congress delays changing US healthcare laws.

"From a GE perspective, at a minimum, we need to have a corporate tax system where the rate of taxation is commensurate with the Organization for Economic Cooperation and Development (OECD) average of 21 or 22%," down from 35%, GE Chief Financial Officer Jeff Bornstein told Reuters, referring to the OECD. "We at least need to be on a par."

The Boston-based industrial conglomerate, which makes more than half of its sales overseas, also wants companies to be taxed in countries where they earn money and not taxed again when earnings are returned to the United States. When companies repatriate foreign earnings, they should be taxed at 4 to 5%, Bornstein said.

GE anticipates that delays in the US Congress repealing and replacing Obamacare could dent its sales, but it does not expect to cut prices to spur sales, Bornstein added.

The comments came as GE, a maker of power plants, aircraft engines, locomotives and medical equipment, posted a 36% profit jump but said industrial division sales fell in the final quarter of 2016, sending its shares down.

Analysts questioned whether slow fourth-quarter growth in organic revenue, which excludes acquisitions, could mean GE will miss the 2017 target of 3 to 5% growth that it affirmed on Friday.

Organic revenue in industrial businesses fell 1% in the quarter, below GE's zero to 2% forecast. GE explained that revenue at its power plant unit was hit by a failure to ship six gas turbines to Bahrain and Iraq that it expected to deliver in the quarter. Revenue in the unit still rose 20%, boosted by the Alstom business GE acquired last year.

With Alstom revenue included, as it will be in future quarters, hitting the revenue target "doesn't look like a stretch," said Deane Dray, an analyst at RBC Capital Markets.

In fact, he added, investors may have sold GE shares on Friday and bought more volatile industrial stocks on the view that GE's growth target implies stronger growth in 2017.

Revenue in GE's oil-and-gas business, which sells products for exploration and production, fell 22%, but weak market conditions meant that decline was expected.

Noting GE's overall organic revenue rose 4% in the fourth quarter, Chief Executive Officer Jeffrey Immelt said the 2017 target was achievable. "I feel pretty secure," he said on a conference call with analysts.

GE shares were off 2% at $30.61 in afternoon trading.

GE said total revenue fell 2.4% to $33.1 billion, slightly below Wall Street expectations of $33.6 billion.

Net income from continuing operations attributable to GE shareholders rose to $3.48 billion, or 39 cents a share, from $2.57 billion, or 26 cents a share, a year earlier.

Excluding special items, earnings fell 2% to 46 cents a share, matching the analysts' average estimate compiled by Thomson Reuters.