General Electric (GE) posted solid results for the second quarter with earnings per share of $.38 a share, which was slightly higher than the consensus estimate and 12% more than the second quarter of the previous year. Revenues of $36 billion marked an increase of 2% on a year-on-year basis and was just below the consensus estimate. But there was a negative impact of almost $1 billion on revenues because of adverse foreign exchange rates. GE's competitors include 3M (MMM), United Technologies (UTX) and Emerson Electric (EMR). The industrial segment grew by 9% to $25 billion and the transportation segment grew by 27% to $1.5 billion and locomotive orders in North America grew by 28%. The aviation segment grew by a disappointing 3% to just under $5 billion. Energy infrastructure grew by 15% to just under $12 billion.
Operating profit in the industrial segment rose by 7% to $3.7 billion on a year-on-year basis and the order backlog is now a record $204 billion. This means that we should see continued strong performance in the second half of the year. As a measure of increasing operating profit, the mammoth energy business is being split into three parts to increase the speed of decision-making while reducing costs. Revenues at GE Capital fell by 8% to $11.5 billion on a year-on-year basis but profit increased by over 30% to $2.1 billion. GE Capital resumed paying a dividend to GE and this amounted to $3 billion during the second quarter. GE Capital plans to deleverage its balance sheet and this could have an impact on revenue streams and the quality of earnings will certainly improve.
GE management is making some smart strategic moves to keep itself profitable for the future by revisiting its roots. For instance, it has sold assets not considered core business such as its holdings in commercial real estate. GE is investing a lot of money on new energy which seems appropriate when you consider that its history goes back to the light bulb. The investments are starting to pay off and profits for this division for the second quarter were up by 13% at $1.76 billion. The business includes both natural gas and wind turbines and shipment of wind turbines doubled over the comparable quarter in the previous year. I personally believe that the real strength of GE lies in the manufacturing business and the energy segment and that is where it should continue to concentrate.
To make energy even more profitable, the business is going to be split into three parts: GE Power & Water in Schenectady, GE Oil & Gas in Florence, Italy, and GE Energy Management in Atlanta. All three divisions will report to the CEO directly, and the split is expected to save each division overheads in excess of $200 million every year. Overall, the fall in net income of 16% was not because of the core business but because of charges related to the past from companies already sold but booked in this quarter. For instance, there was a charge of $533 million related to the sale of its WMC Mortgage company and Japanese consumer finance business from 2007 to 2008.
In other developments, the Federal Deposit Insurance Corporation held its monthly board meeting and there was no news available on whether the sale of the MetLife (MET) bank deposit business to GE Capital was debated. FDIC approval for GE to buy MetLife's U.S. retail deposit business is critical to the insurer's attempt to raise its dividend and buy back shares. Approval was originally expected by June but experts say that the delay does not mean that there is anything wrong with the transaction. MetLife is selling the business, which is less than 2% of its overall revenues, to remove itself from FDIC scrutiny and regulation. The transaction is expected to provide GE Capital with stable and cheap funding.
The environment has been particularly difficult for major multinationals over the last few years and GE has done well to perform strongly despite this. Nine straight quarters of operating profit growth testify to this achievement. For some time, GE has been weighed down by the troubles of GE Capital and its non-performing loans during the financial crisis and this dependence on GE Capital has had an adverse impact on the share price. But it is dealing with these problems by shrinking the GE Capital balance sheet despite the negative impact on revenues. It is also reducing its dependence by once again focusing on its core businesses of manufacturing and energy. GE Capital is focusing on generating cash to boost its Tier 1 capital, which is now just over 10%. GE was once considered the epitome of strong companies but we have seen it stumble over the past few years.
Another area where the strength of the company is sometimes overlooked is the aviation business. There has been a 34% decline in order booking on a year-on-year basis but the trend seems to be reversing with over $17 billion worth of orders being booked at the last Farnborough Air Show for its partnership with CFM. In terms of unit sales, GE has 60% of the global aircraft engine market and is expected to maintain market share for the next five years despite the intense competition from Pratt & Whitney, which has a 30% market share.
I believe that GE has returned to its bluest of blue-chip status and should be an anchor stock in any investment portfolio. The 3% dividend yield makes it an attractive income investment, and every retiree should own GE stock. I believe there is significant upside potential in this stock because of its strategy and the quality of the management team, and I have no hesitation in recommending it to investors.