General Electric Co. (GE) - Get Report posted weaker-than-expected first quarter earnings Wednesday, and warned the current quarter results would decline further, amid a 'material' hit from the global coronavirus pandemic.
GE said adjusted earnings for the three months ending in March were pegged at 5 cents per share, down 64.3% from the same period last year and 3 cents shy of the Street consensus forecast. Group revenues, GE said, fell 8% to $20.5 billion, but came in just ahead of analysts' estimates of a $20.228 billion tally.
Industrial free-cash flow, the company said, was measured at a wider-than-expected -$2.2 billion, as revenues fell 13% from last year in both its power and aviation divisions.
GE also said it will cut cost, and bolster its balance sheet, in order to cushion against the impact of weaker demand in the aviation sector over the coming months.
“The impact from COVID-19 materially challenged our first-quarter results, especially in Aviation, where we saw a dramatic decline in commercial aerospace as the virus spread globally in March," said CEO Larry Culp. "We are targeting more than $2 billion in operational cost out and $3 billion of cash preservation to mitigate the financial impact, and we executed a series of actions to de-risk and de-lever our balance sheet amid a challenging environment."
"While there are many unknowns, there will be another side—planes will fly again, healthcare will normalize and modernize, and the world still needs more efficient, resilient energy," he added. "We're embracing today's reality and accelerating our multi-year transformation to make GE a stronger, nimbler, and more valuable company."
GE shares were marked 0.5% lower in early trading following the earnings released to change hands at $6.78 each, a move that extends the stock's year-to-date decline to around 40%.
Ge pulled its first quarter earnings guidance on April 9, said that it would give additional details during its first-quarter-earnings call later on Wednesday.
In a detailed outlook published on March 4, GE reaffirmed its 2020 profit, revenue and free-cash flow targets for its industrial division, but noted that the latter would suffer a coronavirus hit of between $300 million and $500 million over the first three months of the year.
The group said at the time that it had expected adjusted first quarter earnings of around 10 cents per share, compared to a pre-coronavirus Street forecast of 13 cents per share, with industrial free cash flows pegged at negative $2 billion.