reported losses and other sales in the second quarter, but said that they had made progress in restructuring the long-suffering Power Division and raised their financial estimates for the entire year .
GE also said that CFO Jamie Miller will leave his role and the company is starting to look for a replacement. Ms. Miller, who has been chief financial officer since October 2017, will remain in his role during the transition, the company said.
The conglomerate now expects adjusted cash flow for 2019 from $ 1 billion to positive $ 1 billion, an improvement from previous guidance of $ 2 billion in negative cash flow from its core industrial operations.
Cash is the focus of management and investors as the company has cut dividends twice in recent years due to deep problems in the Power business and financial services. In the second quarter, GE reported a $ 1 billion cash flow from industrial operations, at the low end of its own goal.
"I am encouraged by the steady progress we are making," CEO Larry Culp said in an interview, saying the power business "appears to be stabilizing." He recently spent two weeks traveling in Asia, saying that he has a close eye on US-China trade negotiations, along with interest rates. "There's still a lot to do."
Mr. Culp said he "called" that it is now time for a financial change, and he plans to talk to "new friends and old ones" to evaluate candidates for the job.
GE reported a $ 300 million cash flow reduction in the second quarter related to
The ground support of the 737 Max aircraft, powered by jet engines created by GE in collaboration with France's Safran SA. GE executives had said that ground support could reduce cash flow in the quarter by $ 200 million to $ 300 million.
The company reduced the production speed of the LEAP engines used in the aircraft and expects the ground support to cut cash flow by $ 400 million for each of the third and fourth quarters if the aircraft is still unable to fly, a regulatory filing states .
Meanwhile, Boeing recently pushed the expected first flight to its 777x long-haul traffic, blaming problems with GE's new engine for the aircraft. GE has said it will redesign a part that wears out faster than expected.
In the second quarter, GE reported a net loss attributable to ordinary shareholders of $ 61 million, compared to a one-year profit of $ 615 million. Revenue fell 1% to $ 28.83 billion, as a sharp decline in the Power division, which makes turbines for power plants, offset gains in Aviation and other units.
GE booked a $ 744 million pre-tax write-down to move some assets from its electric grid division into its renewable energy division. Excluding this fee and including 6 cents of a tax benefit from a tax audit, GE said adjusted earnings were 17 cents per share, ahead of an analyst forecast of 12 cents per share, according to Refinitive.
GE shares fell 3.4% to $ 10.16 in morning trading Wednesday. Before the income cut, the share had risen by more than 40% this year, but was down around 17% over the past 12 months. Two years ago GE shares traded for close to $ 25.
The company has positioned 2019 as a "reset year" as it is undergoing a restructuring. In the last quarter, revenue fell by 25% at the power unit and unit profit fell. The other major business units performed better, with revenue increasing by 5% in their aviation unit, which makes jet engines, and slipping 1% in health care, which makes hospital equipment.
GE has shrunk its financial unit and sold assets to pay down debt, including cutting a deal to sell the biotechnology business for more than $ 20 billion earlier this year. In the second quarter, GE raised $ 1.8 billion by selling half of its 25% stake in Westinghouse Air Brake Technologies, or Wabtec, which merged with GE Transportation this year.
The company will conduct a test on its long-term insurance holdings in the third quarter to see if it has enough cash reserved for its expected future obligations. Last year, the company had to commit $ 15 billion in additional policy reserves.
Write to Thomas Gryta at email@example.com
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