General Electric Posts Wider Q2 Loss of $2.2 Billion, But Cash Burn Rate Improves

GE CEO Larry Culp said the company expects industrial free cash flow to be positive next year, after a better-than-expected second quarter burn rate of $2.1 billion

General Electric Co.  (GE) - Get Report posted a wider-than-expected second quarter loss Wednesday, but said its cash burn rate is starting to improve, and would likely turn positive by 2021.

General Electric said its adjusted non-GAAP loss for the three months ending in June was pegged at 15 cents per share, around 5 cents wider than the Street consensus forecast and down from a profit of 11 cents per share over the same period last year.

Group revenues, GE said, fell 38.5% from last year to $17.7 billion, a figure that topped analysts' forecast by around $700 million. Industrial free cash flow was also better-than-forecast, at -$2.1 billion from $-2.2 billion in the first quarter, and the conglomerate said it expected to be free-cash flow positive by next 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. 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," said CEO Larry Culp. "We made faster progress on elements within our control, including our targeted cost and cash preservation actions.'

'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," he added. "We expect to return to positive Industrial free cash flow in 2021. We are accelerating our transformation to make GE stronger and drive long-term, profitable growth."

General Electric shares were marked 0.4% higher in early trading following the earnings release to change hands at $6.89 each, a move that would still leave the stock with a year-to-date decline of around 39%.

Revenues from GE Power, one of the group's biggest divisions, remained reasonably solid, down 11.1% to $4.16 billion, while Aviation revenues fell 44% to $4.4 billion as global aircraft demand collapsed during coroanvirus travel restrictions and Boeing's  (BA) - Get Report 737 MAX remained grounded under FAA orders.

Aviation orders were down 56% at $3.7 billion, GE said, while the unit registered a second quarter loss of $680 million.