By
Bhushan Akolkar
November 10th, 2021
General Electric (GE) stock price fell after the release of the company’s Q1 2020 earnings report. The revenue declined by 8%.
General Electric Co (NYSE: GE) stock price is down. This is mainly attributed to the earnings report released by General Electric which by all accounts isn’t a pretty sight. Sources say that the company that brought the world the light bulb generated only about $20.524 billion. This is an annual decline of about 8%.
As at the time of writing this text General Electric (GE) stock price was at $6.80 (-0.015%).
Adjusted earnings per share were at 5%. This is below the 8% expected earnings by analysts. The company also lost about $1 billion in cash flow in the quarter.
Assessing the impact of the coronavirus on earnings, CEO Larry Culp said in a statement:
“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.”
Q1 Earnings: General Electric (GE) Stock Price Falls as Its Business Declines
This comes as the aviation industry continues to reel from movement restrictions. General Electric’s aviation business fell by about 13% to $6.892 billion. Profits fell 39% to $1.005billion . This fall is from $1.66 billion.
Orders have also declined by 14%. GE’s energy businesses declined as well.
On the bright side, GE’s healthcare unit seems to be doing well. Sources say that the healthcare business unit saw revenues grow by 7% to $5.292 billion. Profits went up to $896 million. This is up from $781 million last year.
The good news appears to have been brought on by the COVID-19 situation. Healthcare products used in diagnosing and treating COVID-19 are driving the profits.
Analysts have viewed this performance as bad. Many had expected higher levels of innovation which would have led to higher profits. Almost all the business units of GE seem to be doing badly.
GE Is Taking Drastic Steps
This is causing the company to take some drastic steps. Larry has indicated that the industrial giant may make cuts of up to $ 2 billion. This comes with cash preservation measures of about $3 billion.
GE has indicated that things will get worse this quarter. The company said:
“The second quarter will be the first full quarter with pressure from COVID-19, and GE expects that its financial results will decline sequentially.”
This is in line with the expectations of many industrial companies across the globe. This comes as GE also withdrew its 2020 guidance.
The company has indicated that it has some resources that it will use to ride out the storm. It’s cash and cash equivalent holdings of about $47 billion is a sure bulwark against the storm.
The debt facility of about $15 billion can also serve marginally.
As GE continues to go through the year, the COVID-19 effect is certainly worse than we all thought. The 128-year company has been able to outlast worse events such as this.
It will be interesting to see what GE’s management will do next. As its founder, Thomas Edison once said: “Be courageous. I have seen many depressions in business. Always America has emerged from these stronger and more prosperous. Be brave as your fathers before you. Have faith! Go forward!”
