reported a loss in the second quarter and flat sales, but stated that it was making progress in restructuring its multi-annual energy unit and increased its financial forecasts for the whole year,
GE also said her chief financial officer, Jamie Miller, would step down and the company would start looking for a replacement. Ms Miller, who has been CFO since October 2017, will remain in the role during the transition, the company said.
The conglomerate now expects adjusted cash flow for 2019, ranging from a negative $ 1 billion to a positive $ 1 billion, an improvement from previous $ 2 billion negative cash flow guidance from its core industrial operations.
Cash is the focus of management and investors, as in recent years the company has reduced its dividend twice, resulting from deep problems in its business and financial services department. In the second quarter, GE reported a negative $ 1 billion cash flow from industrial operations at the lowest end of its own end.
"I am encouraged by the steady progress we are making," CEO Larry Culp said in an interview, saying the energy business "seems to be stabilizing." He recently spent two weeks in Asia and said he has a close look at commercial negotiations between the US and China, together with the direction of interest. "There is still much work to be done."
Culp said he "called" that now is the time to change the CFO and intends to talk to "new friends and old" when considering job applicants.
GE Reported Cash Flow Decrease by $ 300 Million in Second Quarter Related
It is grounded on its 737 Max, powered by jet engines manufactured by GE in partnership with the French Safran SA. GE executives said grounding could reduce cash flow in the quarter by $ 200 million to $ 300 million.
The company has reduced the speed of production of its LEAP engines used in the aircraft and expects grounding to reduce its cash flow by $ 400 million for the third and fourth quarters if the aircraft remains unable to fly, said a regulatory filing,
Meanwhile, Boeing recently rejected the expected first flight of its 777x jetliner, blaming problems with GE's new aircraft engine. GE said they would redesign a part that wears out faster than expected.
In the second quarter, GE reported a net loss to ordinary shareholders of $ 61 million, compared to a profit of $ 615 million a year ago. Revenue fell 1% to $ 28.83 billion, a sharp decline in the electricity division, which makes turbines for power plants, offsetting profits in aviation and other units.
GE reserves an impairment charge for impairment of $ 744 million to move some of the assets from the grid split into its renewable energy unit. Excluding this fee and including a 6 percent benefit per share from tax audit, GE said its adjusted earnings were 17 cents per share, ahead of analysts' estimates of 12 cents per share, according to Refinitiv.
GE stock fell 3.4% to $ 10.16 on Wednesday's trading. Prior to the earnings release, shares had gained more than 40% this year, but were up about 17% over the last 12 months. Two years ago, GE's stock was trading at nearly $ 25.
The company positions 2019 as a "zero year" as it undergoes restructuring. In the last quarter, revenue fell 25% of the power unit and the unit's profit dropped. The other big business units performed better, with revenues rising 5% in the aviation unit that makes jet engines and slipping 1% in the healthcare unit, which makes hospital equipment.
GE shrinks its financial unit and sells assets to pay off its debt, including a deal to sell its biotech business for more than $ 20 billion earlier this year. GE raised $ 1.8 billion in the second quarter, selling half of its 25% stake in Westinghouse Air Brake Technologies or Wabtec, which merged with GE Transportation this year.
In the third quarter, the company will test its long-term care insurance funds to verify that there is enough reserve money for expected future liabilities. Last year, the company had to allocate $ 15 billion in additional reserves to its policies.
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