GE burns through $ 1.2 billion but Wall Street is happy it wasn't worse

admin April 30, 2019

7 2 minutes read

GE burns through $ 1.2 billion but Wall Street is happy it wasn't worse

Shares of GE ( GE ) climbed 6% in premarket trading on Tuesday after the company reported profit and revenue that exceeded forecasts. Wall Street is betting the company's recovery remains intact.

Yet GE is standing by its 2019 guidance for industrial free cash flow to range between negative $ 2 billion and zero.

"I am encouraged by the improvements we are making inside GE," CEO Larry Culp said in a statement. "This is one quarter of what will be a multi-year transformation, and 2019 remains a reset year for us."

That's despite the emergence of a new risk: the Boeing ( BA ) 737 Max crisis. A GE joint venture supplies to the 737 Max, which has been grounded due to safety concerns. GE also owns 29 of the 737 Max aircraft through its airplane leasing business, GECAS.

"GE is also working arm in arm with Boeing while actively monitoring the grounding of the 737 MAX fleet," the company said.

Culp, who became GE's first outsider CEO, has moved urgently to try to fix the iconic company after years of bad broke. GE slashed its dividend to a penny, accelerated sales of long-held businesses and promised to rapidly pay down debt.

During the first quarter, GE announced the sale of its BioPharma unit to Danaher ( DHR ) closed the spinoff of its century-old railroad division and cleaned up its financial arm. GE Capital reached a $ 1[ads1].5 billion settlement with the Justice Department to resolve allegations against its defunct subprime lender WMC Mortgage. Last week, WMC filed for bankruptcy.

"We continue to focus on reducing leverage and improving the underlying performance of our businesses," Culp said on Tuesday.

GE Power sales fell 14% decline as the fossil-fuel division continues to hurt at the rise of renewables. However, GE said its power business performed better than expected, and it reported a 6% increase in its orders backlog. GE has moved to fix the power division by cutting jobs and closing plants.

Aviation continues to be a bright spot at GE. The jet engine division reported a 12% increase in revenue as orders rose 7% thanks to strong demand from manufacturers. GE shipped 424 LEAP engines during the first quarter, up from just 186 the year before.

GE continues to wind down GE Capital, the financial arm that almost ruined the company during the 2008 crisis. GE Capital reported a profit of $ 171 million, up from a loss of $ 1.8 billion a year ago.

"GE remains focused on GE Capital's shrinking and risking, including improving its leverage profile," the company said.

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