GE quarterly revenue drops 12% as company prepares for new CEO
Cash flow at the conglomerate was up on the quarter
General Electric’s Global Operations Center in Mexico. Photograph: Reuters
General Electric reported a 12 per cent drop in revenue for the second quarter, as weakness in its energy connections business offset strength in renewables and power units.
Net profit slumped 58 per cent to $1.34 billion (€1.15 billion), or 15 cents a share, in the quarter ended June 30th, from $3.30 billion, or 36 cents a share, a year earlier.
GE’s energy connections business provides electrification and automation products to the oil and gas, mining, utility and marine industries. Revenue fell to $29.56 billion from $33.49 billion, slightly better than the $29.02 billion consensus estimate of analysts polled by Thomson Reuters.
Adjusted earnings fell 45 per cent to 28 cents a share, compared with estimates for 25 cents.
GE’s closely watched cash flow from operations fell 67 per cent to $3.6 billion from a year ago, reflecting the loss of contributions from the appliances division that the company sold. But the figure was up from $400 million in the first quarter, and GE said it expects cash flow to increase during the remainder of the year.
The company affirmed its full-year forecast for cash flow, profit, revenue and operating margin.
Shares were up nearly 1 per cent in premarket trading at $26.95.
GE faced a “slow-growth, volatile environment” in the quarter, chief executive Jeff Immelt said in his final earnings release before his Aug. 1 retirement. Immelt’s tenure began days before the Sept. 11, 2001, terrorist attacks and included the 2008 financial crisis. While GE stock is 27 percent below its price when Immelt arrived, it has more than tripled from its nadir in 2009. Immelt sold off NBCUniversal, appliances and most of GE Capital. He acquired power assets from France’s Alstom , merged GE’s oil and gas business with Baker Hughes, and moved the headquarters to Boston. Flannery said he is “in the middle of a series of deep dives into the businesses.” He also is “taking a hard look at our corporate spending” to ensure it contributes to earnings, and on a listening tour of investors. GE has cut $670 million in industrial overhead costs this year, Immelt said, and will “meet or exceed” its $1 billion target for 2017 - a goal set after discussion with activist investor Trian Fund Management.