General Electric Raises Profit Forecast on Aviation Boom
GE Raises Profit Forecast for 2023
General Electric (GE) has once again raised its full-year profit forecast for 2023, marking the third time this year. The company’s quarterly earnings surpassed Wall Street estimates, driven by strong demand for jet engine parts and services, as well as improved performance in its renewable business.
Positive Market Response
Following the announcement, GE shares surged by 6% to $113.14 during pre-market hours. This significant increase reflects investor confidence in GE’s revised profit forecast. The Boston-based conglomerate now expects an adjusted profit per share of $2.55 to $2.65 for 2023, compared to the earlier estimate of $2.10 to $2.30.
Increased Cash Flow Estimates
GE also revised its free cash flow estimates for the year, anticipating a range of $4.7 billion to $5.1 billion, up from the previous forecast of $4.1 billion to $4.6 billion in July. This positive adjustment highlights the company’s strong financial position and its ability to generate substantial cash flow.
Aviation Business Soaring
GE’s aviation business, a significant source of revenue, has experienced a surge in demand for aftermarket services. The rebound in air travel has prompted airlines to extend the lifespan of their jets, leading to increased demand for engine maintenance. GE Aerospace CEO Larry Culp expressed satisfaction with the robust growth and solid execution within the commercial engines and services sector.
Contrasting Performance with Rival RTX
In contrast to GE’s success, rival company RTX reported a nearly billion-dollar quarterly loss. This loss was primarily attributed to a major quality crisis at its subsidiary Pratt and Whitney, affecting the popular Geared Turbofan (GTF) engines. GE’s aerospace unit, however, recorded double-digit growth in orders, revenue, and profit compared to the previous year. Additionally, the unit’s margin expanded by 130 basis points during the quarter.
Renewable Business Improvement
GE’s grid and onshore wind businesses contributed to narrowing losses in its renewable unit. Despite previous struggles due to weak demand and higher costs, GE’s CEO expresses confidence in the continuous improvement of these businesses. The separation of the company’s healthcare unit has been completed, and plans are underway to spin off its aerospace and energy businesses, including renewables, into independent companies in the second quarter of next year.
Listing on the New York Stock Exchange
GE will list its portfolio of energy businesses, named GE Vernova, on the New York Stock Exchange under the ticker symbol “GEV.” The aerospace unit will continue to be listed under the existing ticker symbol “GE.” This strategic move aims to enhance the visibility and market presence of both divisions.
Monetization of AerCap Holdings Stake
In the third quarter, GE generated $2.7 billion from the sale of a portion of its shares in AerCap Holdings NV. The company plans to fully monetize its remaining 14.5% stake in the aircraft leasing giant in an orderly manner over time. This monetization effort will further contribute to GE’s financial strength and provide additional resources for future growth.
Surpassing Expectations
GE’s adjusted profit for the third quarter stood at 82 cents per share, exceeding the average analysts’ expectation of 56 cents per share. This impressive performance reaffirms GE’s position as a leading player in the aviation and renewable energy sectors.
