General Electric Co. (NYSE: GE)reported its second quarter financial results and topped analysts’ estimates in both revenue and earnings. GE also reported a smaller-than-expected profit decline across its business segment. Despite the better-than-expected results, shares fell by 4.1% shortly after the opening bell on Friday.
For the second quarter, GE reported revenue of USD 30.1 Billion, increasing 5% year over year and topping analysts’ estimates of USD 29.3 Billion. The Company reported an adjusted EPS of USD 19 cents, beating analysts’ estimates of USD 18 cents.
GE’s profit decline across its segments were smaller than analysts had anticipated, but the loss in its Power unit, offset the gains in its aviation, oil and gas businesses.
In the Power unit, it reported revenue of USD 7.57 Billion, decreasing 15% year over year. The unit reported profits of USD 421 Million, declining 52% year over year. The Renewable Energy segment reported revenue of USD 1.65 Billion, declining 19% year over year, while profits declined by 30% year over year.
The Oil and Gas segment reported a revenue of USD 5.55 Billion, increasing 80% year over year. Aviation reported revenue of USD 7.5 Billion, increasing 10% year over year. Healthcare reported revenue of USD 4.97 Billion, increasing 8% year over year.
“The second quarter was in line with expectations, and we saw continued strength across many of our segments, especially in Aviation and Healthcare.” said GE Chairman and Chief Executive Officer John Flannery said. “We expect the power market to remain challenging, and we continue our focus on operational improvement.”
Flannery continued to say in the earnings transcript that GE reduced industrial structural costs by USD 1.1 Billion, which is more than half of GE’s goal of USD 2 Billion for the year. Flannery then forecast adjusted cash flow of USD 15 Billion by the end of year.
“Our focus is on unrelenting execution of this plan to improve operating results, strengthen our balance sheet, accelerate growth across our businesses, and increase shareholder value,” said Flannery. “We are progressing on our plans to make GE simpler and stronger.”
Despite the declining profits in its Power unit, it was much less than analysts had expected due to corporate cuts.
“It shows stability,” RBC Capital Market analyst, Deane Dray, said. The reduced cash-flow target, while disappointing, came from fewer shipments of power equipment and was “not a new negative. It’s just a continuation of sector-wide weakness.”
GE cuts its annual cash target to USD 6 Billion from its previous range of USD 6 Billion to USD 7 Billion. The Company forecasts its full-year adjusted EPS of USD 1 to USD 1.07.