General Electric Co. predicted slow gains in operations this year and next after the coronavirus pandemic battered results in the second quarter.
The jet-engine division has tracked “early signs of improvement” in flight departures on the path to a lengthy recovery, GE said in a presentation as it reported results. The company burned through $2.1 billion in industrial free cash in the second quarter, less than the $3.3 billion drain expected by analysts.
“It’s really about sequential improvement from here,” Chief Executive Officer Larry Culp said on a call with analysts. “The environment remains challenging. But with respect to those things that are within our control, we think health care is well-positioned to lead, the turnarounds in power and renewables continue, and we’re expecting a multiyear recovery in aviation.”Culp is trying to get GE back on track after the pandemic upended a turnaround he began after taking the reins in 2018. GE on Wednesday posted double-digit declines in orders across all its industrial businesses in the second quarter, with comparable sales drops in all units except renewable energy. Revenue in the aviation business plunged 44% as the virus gutted air travel and dimmed the long-term outlook for aircraft sales.
“Covid-19 clearly put us back,” Culp said in an interview. “It will take us a little longer, just because of what’s happened in aviation, in particular. But that said, I have more confidence today than I ever have that we’re going to see this transformation through.”
The company has accelerated some aspects of its overhaul, he said. GE has reduced debt by roughly $9.1 billion this year, bolstered cash to $41 billion and taken steps to eliminate $2 billion in costs and preserve $3 billion in cash.