General Electric posted quarterly results that topped expectations on Friday, as earnings from aviation, healthcare and transportation offset weak power and oil-and-gas profits.
Profit at GE’s power business fell 38 per cent on a 9 per cent decline in sales; orders dropped 29 per cent.
“The industry continues to be challenging and is trending softer than our forecast,” GE said of the power business.
GE also affirmed its forecast for 2018 earnings and cash flow, and said it expects to book as much as $10 billion in proceeds from divesting industrial assets this year. Those comments eased concern that GE would post poor results.
GE earned an adjusted 16 cents per share, up from a restated 14 cents a share a year earlier. Analysts on average had expected 11 cents a share, according to Thomson Reuters. GE recently restated 2017 results to reflect changes in accounting standards.
Fiona Cincotta, a senior market analyst at www.cityindex.co.uk told Power Engineering International, “A feared downgrade hasn’t materialised and the extent of cost reduction is commendable, but it’d still take a brave soul to declare the worst is behind GE.”
“The power business continues to suffer from lax demand for gas-fired generators, as interest in renewable energy such as wind and solar grows. GE, of course, is also a big supplier of wind turbines. But margins in that market are getting crunched by competition and ever-shrinking government subsidies for wind farms.”
“More consolidation in the wind-turbine market is highly likely and GE may well be sizing up targets despite current constraints on its balance sheet.”
“The ability to pay higher dividends won’t be helped by a decision to set $1.5bn aside to cover potential liabilities from alleged sub-prime mortgage violations–a figure considerably higher than what the market was expecting.”
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