GE burns $ 1.2 billion but Wall Street is happy it will not be worse

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Actions of GE (GE) rose 6% in pre-market trading on Tuesday, after the company reported earnings and revenue higher than expected. Wall Street is betting that the company's recovery remains intact.

Still, GE maintains its forecast for 2019 regarding free industrial cash flow of between $ 2 billion and zero.

"I am encouraged by the improvements we are making to GE," said CEO Larry Culp in a statement. "It's a quarter of what will be a multi-year transformation, and 2019 remains a year of reset for us."

Despite the emergence of a new risk: the Boeing (BA) 737 maximum crisis. A GE joint venture is supplying the engines to the 737 Max, which has been grounded for safety reasons.

"GE is also working hand-in-hand with Boeing while actively monitoring the grounding of the 737 MAX fleet," the company said.

Culp, who became GE's first external CEO last fall, has urgently started repairing this iconic company after years of bad decisions that broke his record. GE has reduced its dividend to one penny, accelerated sales of long-standing companies and promised to repay its debt quickly.
In the first quarter, GE announced the sale of its BioPharma unit to Danaher (DHR), closed the fallout of its centenary rail division and cleaned up its financial arm. GE Capital has reached a $ 1.5 billion deal with the Department of Justice to resolve allegations against its former subprime lender, WMC Mortgage. Last week, WMC filed for bankruptcy.

"We continue to focus on reducing debt and improving the underlying performance of our business," Culp said on Tuesday.

GE Power sales fell 14%, as the fossil fuel division continued to suffer from the ramp-up of renewables. However, GE stated that its electricity business had performed better than expected and that its backlog had increased by 6%. GE has started repairing the electricity division by cutting jobs and closing factories.

Aviation continues to be an asset for GE. The jet engine division recorded a 12% increase in sales, with orders up 7% due to strong demand from manufacturers. GE delivered 424 LEAP engines in the first quarter, up from 186 in the previous year alone.

GE continues to liquidate GE Capital, the financial arm that nearly ruined the company during the 2008 crisis. GE Capital reported a profit of $ 171 million, up from a loss of $ 1.8 billion a year ago year.

"GE remains focused on reducing and reducing GE Capital's risk, including improving its leverage profile," the company said.

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