General Electric (NYSE: GE) reported better-than-expected second quarter financial results on Wednesday morning. The struggling conglomerate also improved its full-year outlook, sending its shares up in premarket trade.
Revenue declined 1% in the three months ended June 30, due to a sharp drop in the company’s power business. Shares of the conglomerate jumped more than 4% before the opening bell, following the earnings report. The stock has gained more than 38% since the beginning of the year.
GE Earnings & Outlook
General Electric had a net loss of $61 million, or $0.01 per share in the second quarter, compared with a profit of $615 million, or $0.07 per share, in the earlier year period.
Excluding some non-recurring charges and tax benefits, the company earned $0.17 per share in the quarter, while analysts surveyed by Refinitiv were calling for adjusted earnings of $0.12 per share.
Companywide revenue stood at $28.83 billion, a 1% decline on a year-over-year basis. That was below a consensus estimate of $28.68 billion from analysts polled by Refinitiv. GE attributed the revenue decline to a sharp slump in its power business.
Revenue from the GE’s power business came in at $4.68 billion, down 25% from last year and below $5.84 billion estimates. Aviation segment brought in revenue of $7.88 billion, up 5% year-on-year but below forecasts of $7.91 billion.
The company had negative $1 billion in cash flow from its industrial operations, versus estimates of negative $1.25 billion.
For the full year, GE views adjusted industrial cash flow of between negative $1 billion to positive $1 billion, compared with its previous outlook of negative cash flow of $2 billion to flat. Management also forecasts earnings of between $0.55 to $0.65 per share.
General Electric CEO Comments
“We made steady progress on our strategic priorities in the second quarter. Our top-line growth was solid, and Power made meaningful improvements on fixed cost reduction and project execution. Margins contracted due to declines in Power, Renewable Energy, and to a lesser extent Aviation, with the first half of 2019 in line with our full-year outlook,” commented General Electric Chief Executive Lawrence Culp.
“We also moved our Grid Solutions equipment and services business to Renewable Energy to offer end-to-end clean energy solutions and moved our Grid Solutions software business to Digital, which resulted in a non-cash goodwill impairment charge,” Lawrence said.
General Electric Profile
With historical ties to inventor Thomas Edison, General Electric was formed through the combination of two companies in 1892. Today, GE is known for its digital industrial offerings and massive installed base spread across a variety of products and services, including aircraft engines, gas turbines, steam turbines, wind turbines, locomotives, and LED lighting, among others.
In its current form, the company focuses on aviation, healthcare, and power, but management announced corporate actions in 2018 that will make aviation, power, and renewable energy the primary areas of focus going forward. – Warrior Trading News