GE profit spikes, overcoming aviation drag

GE saw a 'dramatic decline' in commercial aerospace

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."

BOEING WHACKED BY CORONAVIRUS, 737 MAX GROUNDING

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

GEGENERAL ELECTRIC COMPANY
$7.63
-0.09 (-1.17%)
BABOEING COMPANY
$167.36
-1.71 (-1.01%)

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.

CLICK HERE TO READ MORE ON FOX BUSINESS

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