Revenues at General Electric fell and the company reported a loss in the first quarter due in part to what it described as a “still difficult environment for aviation” as the pandemic weighs on air travel.
The 129-year-old industrial giant’s revenues fell 12 per cent from a year ago to $17.1bn, missing expectations for $17.5bn, according to analysts polled by Refinitiv.
Its aviation business, which supplies aircraft engines and other components, has been hit hard by the pandemic and its impact on air travel. Aviation revenues were down 28 per cent from a year ago to $4.99bn and orders fell 26 per cent “amid ongoing pandemic-related challenges”, the company said. That was still an improvement from the fourth quarter of last year, when orders were down 41 per cent.
The pandemic blow prompted GE to cut about 20,000 jobs last year, and its shares halved between March and mid-May 2020. GE expects the aviation market recovery to begin in the second half of the year, with revenues expected to be “flat to up”.
The cash burn by its industrial divisions totalled $845m, an improvement from $2.2bn in the same period last year.
GE shares, which are up 25 per cent year-to-date, slid 2.5 per cent in pre-market trade on Tuesday.
The Boston-based company reported a net loss of $2.8bn, or 33 cents a share, in the first three months of the year, compared with net income of $6.1bn, or 70 cents a share, in the same period last year. Adjusting for one-off items, the company reported earnings of 3 cents a share, topping analysts’ expectations for earnings of 1 cent.
GE last month sold its aircraft-leasing business to Irish rival AerCap for $30bn as it looks to simplify its operations. GE plans to use proceeds to cut its debt by $30bn, which would take its overall debt reduction to more than $70bn since the end of 2018.
“We are shifting more toward offence and capturing opportunities in the energy transition, precision health, and future of flight,” said Larry Culp, chief executive.
The company, which faces shareholder unrest over Culp’s pay package, reiterated its forecast for full-year adjusted earnings of between 15 cents and 25 cents a share and free cash flow of between $2.5bn and $4.5bn. The latter is closely watched by investors as a sign of the health of GE’s operations and its ability to pay down debt.
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April 27, 2021 at 07:35PM
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General Electric revenues fall in ‘difficult environment’ for aviation - Financial Times
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