Shares rise at General Electric as profit tops estimates

General Electric posted quarterly results that topped expectations on Friday, as earnings from aviation, healthcare and transportation offset weak power and oil-and-gas profits, sending shares sharply higher in premarket trading.

GE also affirmed its forecast for 2018 earnings and cash flow, and said it expected to book as much as $10 billion in proceeds from divesting industrial assets this year. Those comments eased concern that GE would post poor results.

“This news alone should fuel a relief rally,” Deane Dray, analyst at RBC Capital Markets, wrote in a research note.

GE earned an adjusted 16 US cents per share, up from a restated 14 cents a share a year earlier. Analysts on average had expected 11 cents a share. GE recently restated 2017 results to reflect changes in accounting standards.

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“It’s an apples-to-apples, five-cent beat,” said Scott Davis, analyst and chief executive at Melius Research in New York, noting that the figure excludes restructuring costs of about five cents a share.

GE’s shares were up 5.8 per cent to $14.80 in premarket trading, after rising 2.4 per cent on Thursday. The stock has lost more than half its value in the past year.

Diminished expectations

Analysts had forecast GE’s profit to decline in the first quarter and some thought Friday’s results might fail to meet even those diminished expectations.

But the company’s aviation, transportation and healthcare businesses produced double-digit profit growth in the quarter, boosting overall results.

Profit at GE’s power business fell 38 per cent on a 9 per cent decline in sales; orders dropped 29 per cent.

“The industry continues to be challenging and is trending softer than our forecast,” GE said of the power business.

Profit in GE’s oil and gas unit fell 30 per cent, excluding restructuring and other charges, GE said.

Adjusted earnings

Earnings from continuing operations attributable to GE shareholders more than tripled to $369 million, or 4 cents a share, in the quarter ended March 31st, from $122 million or one cent, a year earlier, the company said. Revenue rose 6.6 per cent to $28.7 billion.

GE affirmed that it expects adjusted earnings of $1.00 to $1.07 a share in 2018, excluding restructuring costs, and adjusted industrial free cash flow of between $6 billion and $7 billion.

In February, chief financial officer Jamie Miller warned that profits would be at the low end of that range. – Reuters