General Electric Posts Second Quarter Loss, On Better-Than-Expected Revenues, But Aviation Unit Weak

General Electric (GE) reported a second quarter loss on Wednesday, but revenues came in somewhat better than expected

The conglomerate posted a net loss of $0.15 per share (compared with analysts’ expectations of a $0.10 per share loss according to market data firm Refinitiv) on revenues of $17.7 billion (versus expectations of $17.12 billion).

In the year-ago period GE posted earnings of $0.15 per share on revenues of $28.83 billion.

The company said second quarter revenues were largely driven by robust sales in GE’s power ($4.16 billion) and renewable energy ($3.51 billion) divisions – both above expectations. However, revenues from the aviation unit totaled $4.38 billion, below expectations.

GE also recorded a loss of $2.1 billion in industrial free cash flow – but this figure was better than the company’s own guidance issued earlier this year.

“We had a very challenging second quarter that we met head-on, executing well operationally while we took actions to further de-risk our company,” said CEO Larry Culp in a statement. “Our earnings performance was impacted by the ongoing impact of COVID-19 on our businesses, but Industrial free cash flow was better than our expectations and previously communicated range. We made faster progress on elements within our control, including our targeted cost and cash preservation actions.”

GE shares have plunged about 38% year-to-date.

Culp added: "We're working through a still-difficult COVID-19 environment, and while it's too early to predict the trajectory for the recovery of commercial aviation, we continue to plan for a prolonged return to prior levels of activity. Still, based on what we see today and the actions we've taken, sequential improvement in earnings and cash in the second half of the year is achievable. We expect to return to positive Industrial free cash flow in 2021."

Just prior to the release of the company’s earnings, Reuters reported, Nicholas Heymann, industrial analyst at brokers William Blair, stated: "COVID-19 overnight stalled GE's turnaround. It's not a sinking boat but it is sitting dead in the water. [The] job for the rest of the year is to get it out of the water.”