General Electric spikes as Q1 results suggest its turnaround is moving in the right direction

  • General Electric beat on both the top and bottom lines.
  • Industrial free cash flow was a better-than-expected negative $US1.22 billion.
  • CEO Larry Culp said the company “improve our financial position and strengthen our businesses.”
  • Shares were up more than 7% following the results.
  • Watch General Electric trade live.

General Electric’s turnaround efforts appear to be moving in the right direction as the company’s first-quarter results beat on both the top and bottom lines, sending shares up more than 7% ahead of Tuesday’s opening bell.

The conglomerate earned an adjusted $US0.14 a share on revenue of $US27.3 billion, topping the $US0.09 and $US27.11 billion that analysts surveyed by Bloomberg were expecting.

GE said industrial free cash flow was a negative $US1.22 billion in the quarter, better than the negative $US2.9 billion that Wall Street was anticipating. In March, CEO Larry Culp warned the company could burn up to $US2 billion of cash this year, but that free cash flow would be positive in 2020 and 2021.

General Electric left its 2019 guidance unchanged.

“We saw progress in the first quarter as we continued to execute on our priorities to improve our financial position and strengthen our businesses,” Culp said in the earnings release.

During Q1, GE took further actions to strengthen its balance sheet. The company agreed to sell its biopharma business to Danaher for $US21.4 billion and closed the merger of GE Transportation with Wabtec, the release said. GE also agreed to pay $US1.5 billion to settle alleged subprime mortgage accounting violations with the Department of Justice. Additionally, GE Capital paid down more than $US2 billion of debt.

“I am encouraged by the improvements we are making inside GE,” Culp added.

“This is one quarter in what will be a multi-year transformation, and 2019 remains a reset year for us. We continue to focus on reducing leverage and improving the underlying performance of our businesses to create sustainable, long-term value for our customers, employees, and shareholders.”

GE shares were up more than 33% this year through Monday, trading near $US9.50 apiece.

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