Turnaround on track at General Electric as earnings jump

The chief executive of General Electric said he was “encouraged” after first-quarter earnings at the beleaguered US industrial group beat expectations.

Total revenues dipped 2% to $27.3bn for the three months to 31 March, but continuing earnings per share were $0.11 against $0.03 in the first quarter a year earlier.

Once the world’s biggest company, GE has seen losses widen and debts soar. The dividend was slashed and it fell out of the Dow Jones Industrial Average for the first time in 110 years as the share price tumbled.

But recently installed chief executive and chairman Larry Culp said GE had taken action during the quarter to “improve its financial position and strengthen its business”, including agreeing the sale of its biopharma unit for more than $20bn and paying down $2bn of external debt.

The merger between GE Transportation and Wabtec was also closed during the quarter, resulting in $2.9bn of cash proceeds and a 24.9% stake in the US rail specialist, and GE agreed to pay the US Department of Justice $1.5bn over its now defunct subprime mortgage business, WMC.

Culp, who took over in October, said the results were better than internal expectations, although he left the outlook for the full year unchanged.

He continued: “I am encouraged by the improvement we are making inside GE. 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 business to create sustainable, long-term value for our customers, employees and shareholders.”

Aviation, GE’s biggest unit, reported a 7% improvement in orders, to $8.7bn. The company said it was working with "arm in arm with Boeing" regarding the 737 MAX fleet. GE makes engines for the planes, which were grounded following two fatal crashes, with French partner Safran.

Oil & gas and healthcare also saw orders rise. At the company’s core power unit, orders fell 14% on a reported basis to $4.8bn overall but rose by the same amount organically. The segment profit tumbled 71% to $80m.

GE was forced to make a $23bn write down on the value of the power division last year, most of related to assets bought from France’s Alstom in 2015.

Shares in GE rose 10% in pre-marking trading.