GE beat expectations for revenues and profitability in a quarter in which the coronavirus pandemic continued to weigh down on its core industries, and the industrial conglomerate delivered improved margins in every business except aviation.
The group’s shares rallied almost 7 per cent in pre-market trading after third quarter adjusted earnings of 6 cents per share exceeded Wall Street’s expectations of a 4 cent adjusted loss. Revenues of $19.4bn beat consensus forecasts of $18.7bn in sales.
The stock had fallen 40 per cent since the start of the year as the Covid-19 crisis upended core businesses from aircraft engines to power turbines. The company’s third quarter figures showed a 31 per cent year-on-year drop in orders to $15.5bn.
Larry Culp, chairman and chief executive, said GE’s order book remained “under pressure” but improved operational execution had kept the group on track with its plans to cut costs by $2bn and improve its cash position by $3bn over the full year.
“While our work continues, GE’s transformation is accelerating,” he said. Industrial free cash flow, which reached $514m in the third quarter, would be at least $2.5bn in the fourth quarter and positive in 2021, he said.
GE also recorded a $100m reserve in the period to cover “legacy matters” being investigated by the US Securities and Exchange Commission. It revealed this month that it faced possible action by the regulator over its past accounting of insurance liabilities.