Post Earnings Coverage as General Electric Tops Market Expectations Bolstered by 31% rise in Power Business

LONDON, UK / ACCESSWIRE / July 25, 2016 / Active Wall St. announces its post-earnings coverage on General Electric Co. (NYSE: GE). The company revealed its second quarter financial results on July 22, 2016. The industrial giant’s results beat earnings and revenue expectations and the company also reiterated its fiscal 2016 guidance. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on June 30, 2016, GE reported Q2 FY16 adjusted earnings of $0.51 per share, up 64.5% on y-o-y basis. The profit included a gain of $0.20 per share after GE closed the sale of its home appliances division to Qingdao Haier in June 2016. This was partially offset by $0.9 per share in restructuring charges and other items. This was the best gain in earnings per share since Q1FY11 for the company. Revenue climbed 15% to $33.49 billion as compared to revenue of $29.32 billion in Q2 FY15. Analysts had estimated GE to report earnings of $0.46 on revenues of $31.77 billion.

“The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow growth economy,” Jeff Immelt, GE’s CEO, said in a statement. The company had “strong execution in power, aviation and healthcare that offset challenging environments in oil and gas and transportation.”

Power and Renewable Energy Shine on Alstom

GE’s revenue was bolstered by a 31% jump in the power business and a 28% climb in the renewable energy division, boosted by the company’s $10 billion acquisition of Alstom’s energy business. However, the oil and gas division revenue dropped 22%. Meanwhile, Digital segment revenue climbed 17% in Q2 FY16. The company’s revenue from organic segment fell 1% to $24.4 billion.

Order Book

In Q2 FY16, GE’s order backlog rose 1.3% to $320 billion, reflecting a 2% increase in services orders to $233 billion. However, equipment orders declined 2.2% to $86 billion and dropped 16%, excluding acquisitions and currency effects. GE stated that reduced orders would not have an impact on revenue, which comes as deliveries of actual products and is on course.

Aviation Hopes

GE is looking up to the energy and aviation sector for assistance to overcome the macroeconomic conditions around the globe underlined by Brexit. GE has shed its finance and consumer-focused operations while investing heavily in its gas-turbine and jet-engine divisions. During Q2 FY16, GE announced over $25 billion in orders and commitments at the Farnborough Air show, including a $1 billion contract to develop a new fighter engine for the U.S. Air Force. The company also announced that it was designated to develop a new power source for South Korea’s KF-X fighter jet.

During Q2 FY16 GE divested most of its GE Capital business to remove its description as a systemically important financial institution.

Guidance and Share Repurchase

GE also reiterated its 2016 operating outlook. The company expects FY16 adjusted earnings to be in the range of $1.45 and $1.55 per share against analysts’ expectation of $1.50 per share. GE also forecasted that currency factors may lower earnings in FY16 by $0.2 to $0.4 per share from the prior guidance of a decline of about $0.2.

Through Q2 FY16, GE has returned about $18 billion to shareholders, with approximately $13.7 billion of that from the share buyback plan.

Stock Performance

On July 22, 2016, GE’s shares declined 1.63% to close at $32.06 with a total volume of 57.23 million shares, following the release of its earnings. The company’s shares have gained 5.02% in the past three months and 26.04% in the past 12 months.

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