General Electric shares jump despite multi-billion dollar losses
Wall Street reacts with relief as struggling giant continues modest revival
Shares in General Electric have risen after the company’s third-quarter results beat Wall Street expectations. The US industrial conglomerate posted non-adjusted losses of $9.5bn (£7.4bn, €8.5bn), down from $22.8bn for the same period last year.
GE is still a struggling corporate giant, but the surge in its stock that greeted the results is widely seen as a vote of confidence by traders in chairman and CEO Larry Culp’s efforts to turn the ailing business around. In a statement, Culp said, “Our results reflect another quarter of progress in the transformation of GE.”
In particular, markets were cheered by a forecast of free cash flow from its industrial business of $0 to $2bn for the year, compared to estimates in July which put the range at between minus $1bn and $1bn.
The upswing in fortunes was driven by GE’s core aviation division, which saw an 8 per cent increase in revenue over the same period last year, and its healthcare technology business, which grew revenues by 5 per cent. GE also benefited from shedding its loss-making transportation business in February. It is in the process of selling its medical equipment business to Danaher in a proposed $21.4bn deal.
Problems persist, however. GE’s traditional power division saw year-on-year revenues fall 14 per cent, though this was partially offset by gains in its renewable energy business. In addition, the company continues to warn of a possible hit from the grounding of the Boeing 737 Max fleet. GE makes engines for the planes.
Culp has called 2019 GE’s reset year, after a period in which the US industrial giant seemed to be in a terminal tailspin.