GE shares fall on cash, business worries though profit beats


Reuters

UPDATE 4-GE shares fall on cash, business worries though profit beats


(Adds details from interviews with CFO, analyst)
    By Alwyn Scott
    NEW YORK, April 21 (Reuters) - General Electric Co <GE.N>
reported quarterly sales and adjusted earnings results that beat
analysts estimates on Friday, but its shares fell on concerns
about some of its industrial businesses and its cash outflow.
    The maker of jet engines, power plants and other industrial
equipment also reported a negative $1.6 billion in cash flow
from industrial operating activities compared with a negative
$600 million it expected for the quarter due to a $1.3 billion
increase in working capital and the timing of bills to
customers.
    Investors have been watching cash flow as an indicator of
GE's operating performance, and GE said it still expects to hit
its cash target of $12 billion to $14 billion for the full year.
    Shares were down 2.3 percent at $29.57 in afternoon trading,
making it the second-biggest decliner on the Dow Jones
Industrial Average.
    "There was immediate disappointment that cash came in low,"
said Deane Dray, analyst at RBC Capital markets. Analysts asked
numerous questions about it on the conference call and "it gave
investors a reason not to feel good about the quarter."
    The company also raised concern by giving itself wiggle room
to deliver fewer LEAP aircraft engines this year, a key risk for
the company. It said the range for the year was 450 to 500
engines, instead of nearly 500 it stated earlier.
    "It is notable that GE is taking a more cautious slant by
backing away from a firm target of "500," Vertical Research
Partners analyst Rob Stallard said.
    But GE Chief Financial Officer Jeff Bornstein said in an
interview there was no change in the LEAP forecast.
    "We're not changing our view on our ability to deliver the
LEAP engine this year for Boeing and Airbus," Bornstein said.
    GE shipped 81 engines in the first quarter and expects to
ship 100 in the second quarter, he said, adding: "There's no
delays to customers whatsoever."
    GE beat analysts estimates for adjusted earnings and
revenue, even though revenue fell 1 percent to $27.66 billion,
due to lower sales in its oil-and-gas and lighting businesses.
Analysts expected $26.26 billion, according to Thomson Reuters
I/B/E/S.
    Adjusted earnings of 21 cents a share were unchanged from a
year ago and beat analyst estimates of 17 cents, according to
Thomson Reuters I/B/E/S.
    GE said industrial organic revenue, which is from continuing
businesses, grew 7 percent in the quarter, a strong showing
according to analysts. Industrial operating profit margins rose
by 1.3 percent points, also more than analysts expected, and
ahead of the 1 percentage point forecast for the year.
    Chief Executive Officer Jeff Immelt noted a 10 percent rise
in quarterly orders and said the world economy was "an
attractive environment for GE."
    "We see global growth accelerating, while the U.S. continues
to improve," Immelt said on the conference call, adding that
growth in China, Southeast Asia, Latin America and Africa this
year were all "stronger than last year."
    Separately, European engineering groups ABB Ltd <ABBN.S> and
Schneider Electric SE <SCHN.PA> are competing for GE's solutions
division, which could fetch as much as $3 billion, according to
people familiar with the matter. [nL1N1HT0V8]


 (Reporting by Alwyn Scott in New York and Rachit Vats in
Bengaluru; Editing by Sriraj Kalluvila and Bernadette Baum)
 ((alwyn.scott@thomsonreuters.com; 646-223-6132; Reuters
Messaging: alwyn.scott.thomsonreuters.com@reuters.net))

Keywords: GE RESULTS/ (UPDATE 4)



This article appears in: Stocks , World Markets , Politics
Referenced Symbols: ABBN , GE , SCHN


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