Can Power Issues Affect General Electric (GE) In Q2 Earnings?

 | Jul 28, 2019 09:00PM ET

General Electric Company (NYSE:GE) is scheduled to report second-quarter 2019 results on Jul 31, 2019, before the market opens.

The Power segment — engaged in the production of gas, steam and aero-derivative turbines; generators; and combined cycle systems — accounted for 22.1% of Industrial revenues in the first quarter of 2019. Apart from the Power segment, the Industrial segment’s results include that of four other segments.

Factors to Influence Segmental Performance

The Power segment’s dismal performances over the past few quarters have been worrying General Electric. In first-quarter 2019, the segment’s revenues declined 22% year over year due to weak equipment and services sales. Orders were down 14%. Further, the segment’s operating profits declined 71%. Weakness is likely to persist as evident from General Electric’s expectation for 2019.

The company remains wary of the presence of internal and external challenges, including geopolitical tensions, growing popularity of renewable energy sources, issues with project execution, overcapacity in the industry and others. For 2019, it believes that the segment’s organic revenues will decline in a high-single digit.

For the second quarter of 2019, the Zacks Consensus Estimate for the Power segment’s revenues is pegged at $5,632 million, suggesting declines of 0.5% from the previous quarter and 25.7% from the year-ago quarter’s reported figure. Conversely, the segment’s operating results are predicted to be weak.

However, General Electric reorganized the businesses in first-quarter 2019 to revive the ailing segment. The businesses under the Power segments are now split into two units — Power Portfolio and Gas Power. While Power Portfolio comprises Grid, Nuclear, Steam and Power Conversion businesses; Gas Power includes the company’s Gas lifecycle business.

Overall Q2 Expectations

The Zacks Consensus Estimate for the Industrial’s revenues in the to-be-reported quarter is currently pegged at $27,179 million, suggesting 6.5% growth from the previous quarter and a 5.2% decline from the year-ago reported quarter. Profits for the Industrial segment are likely to be $2,600 million, up 3.1% from the previous quarter’s reported figure and down 17.6% from the year-ago quarter’s number. (Read more: Zacks Investment Research

Get The News You Want
Read market moving news with a personalized feed of stocks you care about.
Get The App

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes