General Electric tops estimates after aviation sales surge

Bloomberg

General Electric (GE) Co beat Wall Street’s expectations for second-quarter profit and reported surprise positive cash flow as sales at the key jet-engine division soared, buoying the conglomerate despite supply woes that continue to pressure the balance sheet.
GE Aerospace’s sales jumped 27% while orders climbed 26% in the period, the company said in a statement, as rebounding travel boosted demand. That helped push the parent company’s profit to 78 cents a share, easily outpacing the 37-cent average of analysts’ estimates compiled by Bloomberg.
“While the topline strength was broad-based across the
segments, aviation was the standout this quarter as the commercial recovery continues to climb,” Deane Dray, an analyst with RBC Capital Markets, said in a note. He also pointed to free cash flow as a “bright spot.”
The results gave GE a lift even as it cut its cash flow expectations for this year and said it expects a negative impact from insurance accounting changes.
While GE is still trending towards the low end of its prior financial forecasts on most metrics, the company said about $1 billion of free cash flow is likely to push out to the future due to supply-chain challenges and sagging renewable energy orders.
“Much is still uncertain about the external pressures companies are facing at this moment,” Chief Executive Officer Larry Culp said in the statement.
The CEO continues to battle inflation, supply woes and sinking demand for wind turbines as he oversees preparations to break up the once-mighty conglomerate beginning next year.
Lengthy Covid-19 shutdowns in China and the surging US dollar added to the challenges facing the maker of jet engines, power equipment and hospital scanners.
GE’s breakup remains on track, Culp said, with the spinoff of GE Healthcare set for early 2023. GE then plans to combine its energy-related businesses spanning gas-power equipment, wind turbines and digital products and spin those off a year later.
Culp has been overseeing preparations for the spinoffs and recently announced new branding for the businesses once they separate from the conglomerate.