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GE cautious as earnings increase, cash burn is slowing; stocks, bonds rise By Reuters


© Reuters. FILE PHOTO: US conglomerate General Electric logo is shown on the website of its energy sector in Belfort

By Alwyn Scott and Rachit Parties

(Reuters) – General Electric (NYSE 🙂 Co said on Tuesday it has received more profit and lost less money than expected in the first quarter, indicating that the improved outlook as part of its new leader, which sent its shares and bonds higher.

New CEO Larry Culp warned, however, that the results are mainly due to the timing of payments to suppliers and from customers, and does not change GE's financial outlook for the year.

"A quarter of a data point is not a trend," said Culp on a conference call with analysts.

GE profit from continuing operations more than three times as a & # 39; sales rose at GE in aviation, oil and gas, as well as public health units. At the same time, the negative cash flow from the industrial business amounted to $ 1.2 billion, significantly less than the $ 2.16 billion outflow, analysts on average expected.

Culp set low profit target in March and warned that GE's industrial cash flow can be negative by as much as $ 2 billion.

Stocks GE increased by 4.5% and closed at $ 10.17, then the call. They grew by more than 10% before the market opens.

GE bonds also rose, extending the recovery of more than $ 100 billion GE debt. Yields on ten more from the issues were at the lowest level at 1. $ 1000000000 GE Capital bonds with a coupon of 4% will be released in July, November 2035 rose by more than 1.5 cents to nearly 87 cents, and the yield of 5.2%, compared with a low of 63 cents on the dollar in November last year to get more than 8%.

Investors are interested in a turnaround, as GE called Culp in October last year to restore the income and improve the stock price, which fell by more than two-thirds since 2016.

GE took a multibillion-dollar write-downs in a row last year, so the slowdown in cash outflows in the last quarter has raised hopes that his fate began to improve.

Industrial free cash flow showed GE's "much smaller outflow than we expected," said Julian Mitchell, an analyst Barclays (LON :), and "should maintain a positive reaction in the action."

But while in Boston conglomerate delayed full-year financial forecast, he noted that "new risks" from Boeing (NYSE 🙂 737 MAX jets Co, followed by GE engines with a partner Safran (PA 🙂 SA of France. Model aircraft was grounded in the world last month after the second fatal accident in less than five months.

Profitability is also a contract for aviation, energy and renewable energy sources of the company's business GE, three main divisions, GE plans to keep it going through the collapse announced last year.

A drop of 1.6 percent point in the industrial fields of GE in the first quarter with a & # 39 is "a reminder of the challenges that the company continues to face," said Rene Lipsch, GE Moody & # 39 leading analyst; s. He added that he expects that the profit will be flat or slightly improved before the end of the year.

GE's cash balance was increased mainly sales of $ 2.9 billion locomotive Wabtec Corp. Business

Culp said that in 2019 the "reset» GE may result in a negative cash flow in its most troubled business, power to 2020 before turning positive in 2021, GE recorded $ 22 billion in goodwill on the unit in the past year.

In the last quarter, capacity orders fell by 14%, and operating profit fell 71% to $ 80 million on revenue of $ 5.7 billion, up 22% compared with a year earlier, GE said.

Some have seen signs that the prospects of the power unit will be improved. "It was a business that everyone was waving is dead … but (it) is more than able to stand up for themselves," said William Blair & Co analyst Nicholas Heymann Reuters.

Income from continuing operations attributable to shareholders of GE rose to $ 954 million in the first quarter, which ended March 31 from $ 261 million a year earlier.

On an adjusted basis, GE earned 14 cents per share. Analysts had expected an increase of 9 cents per share, on average.

Total revenue fell 2% to $ 27.29 billion, above the average analyst estimate of $ 27.05 billion.

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