GE beats estimates amid global malaise

Company shifting to energy, aviation as demand for industrial products drops

General Electric Co. is selling fewer locomotives and less oil-field equipment as global economic uncertainty takes a toll on demand for bigticket industrial products.

Orders fell 2 per cent in the second quarter — and tumbled 16 per cent when excluding the effects of acquisitions and currency shifts — the company said in a statement Friday. That drop, and weak generation of free cash flow, sapped investor confidence and pushed down shares.

“The texture of this quarter is very similar to the two most recent quarters, with exceptionally weak orders,” Nigel Coe, an analyst at Morgan Stanley, said Friday in a note. GE must generate significant growth in the second half of this year in an “extremely challenging” environment, he said.

GE is betting on markets such as energy and aviation to help overcome economic malaise and global uncertainty highlighted by the U.K. vote to leave the European Union. Chief Executive Officer Jeffrey Immelt has sold finance and consumerfocused operations while investing in equipment manufacturing and building a complementary software business.

GE’s adjusted earnings rose to 51 cents (U.S.) a share, boosted by higher profits in the power and renewable energy divisions. That exceeded the 46-cent average of analysts’ estimates compiled by Bloomberg. Sales of $33.3 billion compared with $31.9 billion expected by analysts.

The profit included a gain of 20 cents a share after GE closed the sale of its appliances unit during the quarter. That was partially offset by 9 cents a share in restructuring charges and other items.

Immelt acknowledged “macro volatility” but said strength in the power and aviation businesses will offset weakness in the oil and transportation divisions.