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Home / Business / GE share gets lower as CFO exit and rising 737 Max costs distract from positive results and promoted prospects

GE share gets lower as CFO exit and rising 737 Max costs distract from positive results and promoted prospects



Shares in General Electric Co. fell on heavy volume Wednesday and erased previous sharp gains as the industrial conglomerate's revenue and free cash flow hit, raising its full-year outlook, not quite enough to inspire investors. [19659002] Taking some of the shine off of GE's results, the company said that CFO Jaime Miller will step down after less than two years in the role. In addition, GE said it expects negative impact from the ground support of Boeing Co.'s 737 Max fleet to ramp up in the second half.

stock

GE, + 0.35%

swung to a 1

.3% loss in midday trading, reversing a 6.0% premarket rally and a previous gain of 2 , 6% to a five-month high. The volume ballooned to 101 million shares, already more than the full-day average of 43.4 million shares.

The stock's sale from previous highs holds it down for a six-month trading interval, where it has cut between $ 9 and just under $ 10.

"2019 is still a reset year at GE," said CEO Larry Culp, following the conference with analysts. "Our results so far are ahead of our prospects in several areas," with the power business showing "early signs" of stabilization.

Don't miss : GE to "reset" this year, start turning around for the next two years.

FactSet, MarketWatch

GE swung to a net loss of $ 61 million, or 1 percent a share in the last quarter, from revenue of $ 615 million, or $ 0.10 per share, over the same period a year ago. Excluding one-off effects, adjusted earnings per share fell to SEK 0.17 from SEK 0.10, but were above the FactSet consensus of SEK 0.12.

Adjusted Industrial Free Cash Flow (FCF) was negative $ 1 billion, but it hit the FactSet consensus of negative $ 1.25 billion. For 2019, GE raised its FCF guidance range to negative $ 1 billion to positive $ 1 billion from negative $ 2 billion to flat.

See related : GE shares decline as negative cash flow prospects wipe out the gain from the biopharma agreement.

Total revenues fell 1% from a year ago to $ 28.83 billion, above the $ 28.68 billion FactSet consensus. [19659002] In GE's business segments, power revenues fell 25% to $ 4.68 billion, well below the $ 5.84 billion FactSet consensus, while renewable energy revenues grew 26% to $ 3.63 billion, or well above expectations of 2 , $ 37 billion.

For power, GE said it now expects the cash flow in 2019 to be flat to down, from previous guidance of simply down.

FactSet, MarketWatch

Elsewhere, aviation revenues rose 5% to $ 7.88 billion, just shy of expectations of $ 7.91 billion; healthcare revenue fell 1% to $ 4.93 billion, missing expectations of $ 5.04 billion; and oil and gas revenues grew 7% to $ 5.95 billion, beating expectations of $ 5.73 billion.

In aviation, CFO Miller said the founding of Boeings

BA, -0.11%

737 Max fleet, for which GE makes engines, has negatively affected cash flow by around $ 300 million per quarter during the first half of the year. She said the impact would increase to $ 400 million for each quarter as the fleet remains grounded.

GE said separately that it has initiated a search for a new CFO. Miller has agreed to remain in the role of assistance with a smooth transition. CEO Culp said that with the company's stabilization beginning to take hold, "this is the right time for a change."

CFRA Analyst Jim Corridore repeated the buy rating on GE's stock and its $ 12 price target. "GE's turnaround is developing slowly, and we believe the company has a good plan for turning power and focusing on renewable energy, aviation and health care," Corridore wrote in a note to clients.

Looking ahead, GE 2019 lifted adjusted EPS guidance to a range of 55 cents to 65 cents from 50 cents to 60 cents. The company also cut the outlook for restructuring costs to $ 1.7 billion to $ 2.0 billion from $ 2.4 billion to $ 2.7 billion and its restructuring of cash guidance to $ 1.5 + billion from $ 2.0 + billion.

GE's stock has now gained 2.2% over the past three months, while SPDR Industrial Select Sector listed funds

XLI, + 0.08%

has coped with 0.9% and Dow Jones industrial averages

DJIA, + 0.00%

has advanced 2.4%.

"It's early in a multi-year transformation," Culp said. He said that the "cultural shift" is starting to take hold, based on "lightness, openness and humility" and with a "hyper focus" on the customer and see GE through the customer's eyes.

"In summary, we're on our way," Culp said.


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