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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.
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.