GE Whipsaws as Aerospace Wins Against Wind Business Issues

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General Electric Co. reported better-than-expected third-quarter cash performance amid strength in its jet engine business, helping the manufacturer counter a deterioration in its wind operations and ongoing supply chain challenges .

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(Bloomberg) – General Electric Co. reported better-than-expected third-quarter cash performance amid strength in its jet engine business, helping the manufacturer counter a deterioration in its wind operations and continued challenges from the Supply Chain.

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GE Aerospace sales jumped 24% while profits soared 52% in the period, reflecting demand for maintenance and services from airlines that have to keep their planes in the air during the busy summer season . Leap engine deliveries for Boeing Co. and Airbus SE were up more than 50% from the second quarter.

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The performance was “fueled by the improving business environment and our progress management operations and supply chain environment,” chief executive Larry Culp said in a statement Tuesday.

Aerospace’s strength contrasted with a sharp downturn in the renewables unit, underscoring the big challenges Culp faced as he tried to revive the once mighty conglomerate. It is now preparing to split GE into separate companies focused on the healthcare, aerospace and electrical equipment sectors, beginning with the planned spin-off of GE HealthCare in January.

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See also: GE cuts hundreds of jobs in onshore wind unit

Shares of GE were volatile after the report, falling as much as 8.7% premarket before turning positive and falling again after regular trading began. They were down less than 1% at 9:47 a.m. in New York.

GE reported adjusted earnings per share of 35 cents in the latest quarter, compared to an average of 47 cents expected by analysts. Free cash flow – a closely watched measure of underlying earnings power – was $1.2 billion, far exceeding the $319 million expected by analysts.

“Overall, a mixed quarter,” Credit Suisse analyst John Walsh said in a note.

GE Renewable Energy saw operating losses soar to $934 million in the third quarter as orders fell 43% and sales fell 15%. Although never a cash cow, the company’s wind turbine unit has deteriorated over the past year alongside soaring inflation, power chain issues supply and policy changes in the United States that dampened near-term demand.

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The company said it would restructure its energy-related business, focusing on the renewable energy unit. The plan, which will generate an expenditure of about $600 million, is expected to generate annual savings of about $500 million, he said.

GE slashed its full-year profit target as it grapples with weakness in renewables. Adjusted earnings per share will be $2.40 to $2.80, GE said, after previously guiding down a range of $2.80 to $3.50. Analysts had estimated $2.67 on average.

The company also said it now expects its adjusted organic profit margin this year to increase by just 125 basis points. GE now forecasts free cash flow of about $4.5 billion.

—With help from Karen Lin.

(Updates with stock trading in fifth paragraph)

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