General Electric Beat Revenue and Profit Estimates

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General Electric (GE) has reported 1st quarter revenues of $27.66 billion which exceeded Wall Street’s estimates of $26.4 billion. However, the revenues it earned for the quarter represents a 1% decline. The company got lower sales from its oil and gas and lighting businesses.

Earnings per share (EPS) for the quarter were at 21 cents while analysts were expecting an EPS of 17 cents.

Jack De Gan, chief investment officer at Harbor Advisory, described the earnings report as a “great report.” De Gan said, “Jeff at the end of the day is going to be viewed as a guy who stepped into a really difficult situation and spent his career fixing it.”

Earnings from continuing operations that is attributable to GE shareholders increased to $858 million, up from $248 million last year. EPS from continuing operations grew from 3 cents to 10 cents.

However, GE had a negative $1.6 billion in cash flow from industrial operating activities. GE’s aviation business posted revenue growth of 9% to $6.8 billion. Its’ power division had a 17% increase in sales to $6.09 billion.

Quarterly orders are also up by 10% to $25.7 billion. Equipment orders have reached $12.3 billion while services orders reached $13.4 billion. Regarding equipment backlog, it stands at $83.9 billion while the services backlog is at $240.4 billion. In totality, order backlog has risen 3% year over year.

Its’ renewable-energy business enjoyed a 22% increase in revenue. This includes wind turbine sales. Its total industrial operating profit increased by 11%.

In the 1st quarter of this year, GE got two HA gas turbine orders, one of which was from China, its’ very first from it. In total, it has 30 HA gas turbine units as backlog.
For the full year, the company expects to reach its cash target of $12 billion to $14 billion.

Jeff Immelt, Chairman, and CEO of GE said that the company’s merger with Baker Hughes is moving and remains on track. Immelt said, “We expect the deal to close in mid-2017. We are executing a $2 billion cost out program over 2017 and 2018 to deliver more value to our customers, shareowners, and employees.”

Significant savings through synergies are expected when GE’s oil and gas business combine with Baker Hughes. The merger will allow them to compete with Schlumberger, the industry’s leader.

Immelt said, “We expect cash flows to improve throughout the remainder of the year, with no change to our full year cash flow framework. We reaffirm our 2017 operating framework for Industrial operating + Vertical EPS, organic revenue growth, and industrial operating margin expansion.”

In recent years, GE has shifted its business towards industrial businesses by exiting low-margin businesses like home appliances.

GE has continued its exit from GE Capital. For the 1st quarter, it has closed $7 billion in asset sales to reach $198 billion based on its original GE Capital Exit Plan. According to GE, the company said that all major transactions that it has planned are now completed.

General Electric makes a variety of industrial equipment including jet engines and power plants.

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