General Electric Co. shares declined on Wednesday, offsetting earlier strong gains as the industry conglomerate's profits and free cash flow, as well as increased year-to-date prospects, were insufficient to attract investors.  CFO Jaime Miller will step down after less than two years to improve GE's results. In addition, GE expects the negative impact of grounding on Boeing Co.'s 737 Max fleet to increase in the second half of the year.
GE, + 0.67%
The sell-off of the stock from previous highs holds it in a six-month trading range, in which it has dropped from $ 9 to just under $ 9 below $ 10. Read more about the technical outlook of the stock.
"2019 will be a setback for GE," said CEO Larry Culp in a conference call with analysts. "Our results so far exceed our expectations in several areas, with the electricity business showing" first signs "of stabilization.
Do not miss : GE will "reset" this year and turn around in the next two years.
GE posted a net loss of $ 61 million or 1 cents last quarter, accounting for $ 615 million or 7 cents per share in the same period last year. Excluding one-time items, adjusted earnings per share fell from 18 cents to 17 cents, but was above the 12-cent fact-set consensus.
Adjusted Industrial Free Cash Flow (FCF) was negative $ 1 billion, but outperformed the FactSet consensus of $ 1.25 billion. For the year 2019, GE raised its FCF forecast from minus $ 2 billion to a flat-rate of minus $ 1 billion.
See Related : GE Shares Decline as Negative Cash Flow Prospects Overcome Biopharmaceutical Profits] In GE's business, electricity sales fell 25% to $ 4.68 billion USD, well below the $ 5.84 billion FactSet consensus. Renewables sales increased 26% to $ 3.63 billion, well above expectations of $ 2.37 billion.
The cash flow for the year 2019 should remain unchanged according to previous forecasts.
Elsewhere, revenue from air travel increased 5% to $ 7.88 billion, below expectations of $ 7.91 billion. Revenues from Health Care declined 1% to $ 4.93 billion to miss expectations of $ 5.04 billion. and oil and gas revenues increased 7% to $ 5.95 billion, exceeding expectations of $ 5.73 billion
The maximum fleet for which GE produces engines has negatively impacted cash flow for the first half of the year by approximately $ 300 million per quarter. She said the impact will increase to $ 400 million for each quarter the fleet remains on the ground.
Regardless, GE said it had initiated a search for a new CFO. Miller has agreed to stay in the role to support a smooth transition. CEO Culp said that "starting the stabilization of the company is the right time for change".
CFRA analyst Jim Corridore reiterated his buy rating for GE's share and its target price of $ 12. "The turnaround of GE is progressing slowly and we believe the company has a good plan to improve power supply and focus on renewable energy, aviation and healthcare," Corridore wrote in a note to customers The EPS guidance was adjusted to a range of 55 cents to 65 cents from 50 cents to 60 cents. The company also lowered its restructuring guidance from $ 2.4 billion to $ 2.7 billion at $ 2.0 billion and cash guidance from restructuring charges from $ 2.0 billion to $ 1.5 billion.
GE's share has gained 2.2% in the last three months. during the SPDR Industrial Select Sector Exchange Traded Fund
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have tackled 0.9% and the Dow Jones Industrial Average
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"It's a start of a multi-year transformation," said Culp. He said that "cultural change" begins, based on "openness, transparency and modesty" and with a "hyperfocus" on the customer and seeing GE through the eyes of the customer.
We're on our way, "Culp said.