Industrial conglomerate General Electric reported a sharp slowdown in orders in its aviation business during the first quarter of the year as the global clampdown on air travel took its toll.
The group’s aviation division — which makes engines and other aircraft parts — saw orders slide 14 per cent to $7.5bn in the three months to the end of March, compared with the previous year. The global aviation industry is in the midst of an unprecedented crisis as government efforts to stem the spread of coronavirus have triggered a collapse in demand.
Lawrence Culp, GE chairman and chief executive, said: “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.”
Profits in the aviation unit fell 39 per cent to more than $1bn. The group’s healthcare division fared better, however, with profits rising 15 per cent to $896m on the back of a surge in orders for products used to diagnose and treat Covid-19.
For the business as a whole, industrial free cash flow — a key measure, which Mr Culp has focused on rebuilding — deteriorated by $1bn to minus $2.2bn. Analysts polled by FactSet had forecast a shallower fall to minus $2bn. Total revenues of $20.5bn were down 8 per cent on last year but broadly in line with expectations.
Earnings per share, adjusted to exclude certain items, were $0.05 for the quarter, compared with $0.13 last year and just shy of the $0.08 expected by analysts. Adjusted industrial profits, a core measure of GE’s earnings, fell 46 per cent year on year to $1.1bn. The company pulled its full-year guidance earlier this month.
Mr Culp sought to paint a more positive picture for the period ahead, saying that while the virus posed “many unknowns” in the immediate future, the company would rebound. “There will be another side — planes will fly again, healthcare will normalise and modernise, and the world still needs more efficient, resilient energy.”