GE posts higher earnings on recovery in aviation industry

CHICAGO: general Electric Co on Tuesday surprised Wall Street with higher quarterly profit and positive cash flow as recovery in the aviation industry propelled its jet engine business, sending its shares higher in premarket trading.

The Boston-based industrial conglomerate reiterated that its full-year results were on track to hit the low end of its forecast due to ongoing supply-chain and inflationary pressures. However, it trimmed the full-year free cash flow forecast by about $1 billion.

“Working capital will be pressured as GE protects customers from the impact of supply chain challenges, as well as Renewable Energy-related orders,” the company said. The pressure will see about $1 billion of free cash flow pushed “into the future”, GE added.

In January, it projected adjusted profit in 2022 to be in the range of $2.80 to $3.50 per share and expected to generate $5.5 billion to $6.5 billion in free cash flow. GE’S shares were up 3.9 per cent at $70.99 in premarket hours.

A strong recovery in air travel has bolstered demandat ge’ s engine business, which is the company’ s cash cow. The unit reported a 27% year-on-year jump in revenue in the quarter through June on the back of higher shop visits and spare part sales.

The company expects demand at its aviation unit to remain strong, resulting in more than 20 per cent revenue growth and $3.8 to $4.3 billion operating profit this year.

Raytheon Technologies Corp, whose Prat & Whitney segment makes jet engines, has also reported a jump in demand for its engines and atermarket services.