General Electric Co. beat Wall Street’s estimates for profit, sales and cash flow in the first quarter and boosted the low end of its annual guidance as the manufacturer benefited from surging aerospace demand.
Adjusted earnings were 27 cents a share in the first three months of the year, GE said Tuesday in a statement, about double the average of analysts’ estimates. Sales were $13.7 billion, compared with $13.2 billion expected by Wall Street.
The results reflect “robust market demand and our progress operating leaner and more focused businesses,” Chief Executive Officer Larry Culp said in the statement.
GE has said it’s aiming to more than double earnings this year before separating its energy-related businesses in early 2024. The spinoff of GE Vernova will leave GE Aerospace as the remaining company, completing Culp’s multiyear plan to fix and break up the iconic American manufacturer.
The shares rose less than 1% as of 6:47 a.m. in early trading in New York.
Free cash flow — a closely watched measure of earnings power — was $102 million in the first quarter, significantly better than the $731.5 million outflow that analysts expected in the period, typically GE’s weakest based on the seasonality of its businesses. GE said it was the first time in nearly a decade it generated positive free cash flow in the first quarter.
A stronger balance sheet and promising growth prospects have helped GE shares soar more than 50% this year. The stock last week surpassed $100 for the first time since early 2018, before Culp took over and began orchestrating his turnaround of the industrial giant.
The rally took hold in early January as GE spun off its health-care division and continued to gain steam as it issued mid-decade aerospace sales and profit targets that topped Wall Street expectations. The company next year will become a pure-play aerospace giant powering about 75% of all commercial aircraft flights with its jet engines and those from a joint-venture with Safran SA.
GE also raised the low end of its full-year profit and free cash flow forecasts. It now expects adjusted earnings of at least $1.70 a share compared to $1.60 previously and a minimum of $3.6 billion in free cash flow, up from $3.4 billion.
Aerospace Orders Up
Revenue at GE Aerospace jumped 25% in the first quarter to $6.98 billion while orders grew 14%. Profit margins at the division expanded to 19% even as the company delivered more loss-making Leap engines to Boeing Co. and Airbus SE.
GE Renewable Energy posted an operating loss of $414 million, extending its streak of red ink. GE is restructuring the troubled division to return to profitability by 2024 expects growth for its wind turbine business over time as countries work to cut carbon dioxide emissions from power grids. In a bright spot, orders surged 92% to $5.35 billion, driven by GE’s grid and North American onshore wind units.
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