General Electric Co. POR 1.15% reported $4.4 billion in fourth-quarter cash flow, beating its own projection and ending 2020 without burning cash, a year ahead of schedule.
The Boston conglomerate said the surge of cash came from orders in its power and renewables divisions, along with improved financial efficiency. The company has been cutting corporate costs and jobs in its aviation unit while streamlining its power business.
The coronavirus pandemic continues to pressure GE’s jet-engine business, its largest division, but the overall results showed progress in the yearslong turnaround of the company that also makes health-care machines and power-generating equipment.
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GE shares are up 60% in the last six months, closing Monday at $10.99, as investors are encouraged by continued improvement in cash flow, debt reduction and cost cutting. The S&P 500 index is up about 20% in the same period. GE shares gained about 4% in premarket trading Tuesday.
GE’s cash flow is closely watched as a sign of the health of the company’s operations and ability to pay down debts. The company had predicted fourth-quarter cash flow of at least $2.5 billion. The company burned through $4.3 billion in cash in the first half of the year.
For the full year, GE reported lower revenue after shedding units, but positive cash flow of about $600 million from its industrial operations. GE forecast $2.5 billion to $4.5 billion of cash flow for 2021.
The GE aviation division’s revenue fell nearly 35% to $5.8 billion in the fourth quarter, while orders fell by half. The drop in aviation accounted for much of the decline in the company’s fourth-quarter revenue.
GE said Tuesday it expects the aviation market, which has been sapped by the coronavirus pandemic, to begin recovering in the second half. It expects 2021 revenue in the division flat or higher from 2020.
A GE joint venture makes the engines for Boeing Co. ’s MAX jet, which was grounded in March 2019 after two deadly crashes but was cleared to fly again in November. Boeing reports financial results on Wednesday.
Cash flow was driven by the health-care division, which reported $2.6 billion in cash flow for the year excluding its biopharma operations, which it sold. The unit makes CT scanners, MRI machines and other hospital equipment.
GE reported a jump in business in both its power unit, which makes turbines for power plants, and its renewable-energy unit, which mostly makes wind turbines. In the fourth quarter, orders at power rose 26% and renewables jumped 34%. Slack demand in the power unit had sapped GE’s profits in prior years.
Overall, GE reported net income attributable to common shareholders of $2.44 billion for the fourth quarter, compared with a profit of $538 million a year before.
Excluding items, GE said its adjusted earnings were 8 cents a share, compared with Wall Street‘s estimate of 9 cents a share. Quarterly revenue fell 16% from a year before to $21.9 billion.
Write to Thomas Gryta at [email protected]
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