A logo was displayed on Tuesday, January 10, 2017, next to the gas turbine at the General Electric Company (GE) Energy Plant in Greenville, South Carolina, USA. General Electric Company is going to release the earnings figures on 20 January. .
Sharat / Bloomberg / Getty Images
Shares of General Electric rose more than 8% on Tuesday after the company reported better industrial free cash flow for the fourth quarter and a juicy outlook for the year.
The company closed industrial free cash flow with $ 4.37 billion in the fourth quarter, following a surprise when CEO Larry Kulp estimated at least $ 2.5 billion for the last three months of the year. The strong quarter pushed the company’s industrial free cash flow into positive territory for the year.
GE also estimated that it would generate between $ 2.5 billion for 2021 and $ 4.5 billion in industrial free cash flow.
The company reported a revenue for the fourth quarter ended December 31 that slightly beat analyst expectations, while its profit margins declined as the industrial giant’s coronovirus epidemic continued.
Here’s what GE expected from Wall Street, based on estimates from average analysts compiled by Refinitive:
- Adjusted EPS: 8 cents vs. 9 cents expected.
- Revenue: $ 21.93 billion vs. $ 21.83 billion
The company’s better-than-expected earnings for the quarter were down 16% compared to the same period a year earlier. On an unfair basis, the company reported net earnings of 27 cents per share.
“As progress progressed in 2020, we have improved GE’s profitability and cash performance despite a still tougher macro environment,” Kupp said in a statement. “The fourth quarter ended a strong free cash flow for a challenging year, reflecting better operating results as well as strengthening and improving power and renewable energy orders.”
The 129-year-old industrial group makes everything from jet engines to gas turbines and provides some financial services. It no longer manufactures devices and lightbulbs, which made it a household name in the 20th century, as the company slowed down and focused on turning profits.
The company’s strong fourth quarter performance was largely driven by growth in orders across its power and renewable energy businesses, which offset the decline in aviation and healthcare.
GE’s power business reported 26% year-over-year growth in the order of $ 5.62 billion for the quarter, driven largely by strong sales of gas power equipment. The company was able to reduce fixed costs by 12% in its gas power business, enabling it to deliver positive cash flow for 2020, a year ahead of schedule.
The renewable energy segment saw orders of $ 6.29 billion, up 34% from a year earlier. Revenue in the segment fell by about 7% from a year earlier to $ 6.7 billion.
The company’s cash cow, once fell 41% compared to a year earlier, which was an order in the Pandemic aviation unit, as the pandemic reduced air travel during 2020. GE noted in its 2021 outlook that it “considers aviation revenue flat from year to year” year, which is dependent on aircraft delivery times, along with accelerating the commercial aviation market in the second half of 2021 . “
The health-care segment ordered $ 4.98 billion, down about 15% from a year earlier. But GE attributed the year-on-year decline mostly to sales of its biopharma business in March.
“Our team proved to be resilient over the past year, and the momentum is growing in our businesses,” Kallap said. “We are in leading positions to capture opportunities in the future of energy transition, precision health and flight.”
GE Capital’s financial services arm, GE Capital, reported net losses of approximately $ 200 million, largely driven by the company’s $ 200 million settlement with the Securities and Exchange Commission to confuse investors.
The stock has been on a tear in recent months, with a surprise gain in the third quarter reported in October that boosted the stock by more than 70% in the fourth quarter. Positive Kovid-19 vaccine news, good for the group’s troubled aviation sector, has sustained growth.
And some investors are moving fast on the company’s turnaround under Culp, especially when they forecast positive cash flow for 2021. The firm has continued to pay its debts during the epidemic and has trimmed its aviation business, for example.
This story is developing. Check back here for updates.
.