GE chief cautious despite profit rise
General Electric has said it generated more profit and lost less cash than expected in the first quarter, suggesting an improving outlook under its new leader that sent its shares and bonds higher.
New CEO Larry Culp cautioned, however, that the results stemmed largely from the timing of payments to suppliers and from customers, and did not alter GE's financial outlook for the year.
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"One quarter is a data point not a trend," Mr Culp said on a conference call with analysts.
GE's profit from continuing operations more than tripled as sales rose in GE's aviation, oil and gas, and healthcare units. At the same time, negative cash flow from industrial business was $1.2bn, much less than the $2.16bn outflow analysts were expecting.
Mr Culp had set low earnings targets in March and warned that GE's industrial cash flow could be negative by as much as $2bn. Shares were up 3.9pc at $10.11 at midday, after the call. They rose more than 10pc before the market opened.
GE bonds also rallied, extending a recovery in more than $100bn of GE debt. Yields on dozens of longer-dated issues were at their lowest since November 1. A $1bn GE Capital bond with a 4pc coupon due in July 2035 was up more than 1.5 cents at nearly 87 cents and a yield of 5.2pc, compared with a low of 63 cents on the dollar last November to yield more than 8pc.