GE profit spikes, overcoming aviation drag

GE, Ford to produce 50,000 ventilators

President Trump discusses increased ventilator production in the United States and says the country will send medical supplies to nations that desperately need them during the coronavirus outbreak.

Get all the latest news on coronavirus and more delivered daily to your inbox.  Sign up here.

Continue Reading Below

General Electric’s first-quarter profit spiked 73 percent from a year ago as CEO Larry Culp fought to keep his turnaround plan on track while positioning the manufacturer to weather the COVID-19 pandemic.

The Boston-based conglomerate earned $6.16 billion, or 72 cents a share, as total revenue fell 8 percent to $20.5 billion. On an adjusted basis, GE earned 5 cents per share, missing the 8-cent estimate from analysts.

“The impact from COVID-19 materially challenged our first-quarter results, especially in aviation, where we saw a dramatic decline in commercial aerospace as the virus spread globally in March,” Culp said in a statement. “We're embracing today's reality and accelerating our multi-year transformation to make GE a stronger, nimbler, and more valuable company."


The COVID-19 pandemic helped drag revenue at both GE's aviation and power divisions down by 13 percent year-over-year. Profit from aviation, which makes jet engines for commercial airliners — many of which have been parked because of sagging travel demand – fell 39 percent to $1 billion. The power business lost $129 million.

Operating costs exceeded cash generation by $2.2 billion in the quarter, the company said, a metric that gained heightened importance in the past couple of years as sales in the high-dollar power unit sagged after a major acquisition.

Stocks in this Article

COVID-19 negatively impacted GE's operating cash flow by about $1 billion, reducing industrial profit by $800 million and GE Capital earnings by $100 million.

General Electic is targeting more than $2 billion in operational cost reductions and $3 billion of cash preservation to soften the impact of COVID-19.

GE warned second-quarter results will see a sequential decline due to COVID-19. The company withdrew its 2020 guidance on April 9 due to the uncertainty caused by the virus.


General Electric shares have fallen 39 percent this year, lagging the S&P 500's 11 percent decline.

Source: Read Full Article