GE cash flow turns negative in first quarter

General Electric reported on Friday that first-quarter cash flow from its industrial operations turned negative and was less than the company expected, though its earnings and revenue exceeded analyst estimates.

The maker of jet engines, power plants and other industrial equipment reported a negative $1.6 billion in cash flow from industrial operating activities compared with a negative $600 million it expected for the quarter due to higher working capital and the timing of bills to customers.

Investors have been watching cash flow as an indicator of GE’s operating performance, and GE said it still expects to hit its cash target of $12 billion to $14 billion for the full year.

Chief executive Jeff Immelt noted a 10 per cent rise in quarterly orders and said the world economy was “an attractive environment for GE”.

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“We see global growth accelerating, while the US continues to improve,” Mr Immelt said on a conference call, adding that growth in China, southeast Asia, Latin America and Africa this year were all “stronger than last year”.

GE beat analysts estimates for adjusted earnings and revenue, even though revenue fell 1 per cent to $27.66 billion, due to lower sales in its oil-and-gas and lighting businesses. Analysts expected $26.26 billion, on average.

Adjusted earnings of 21 US cents a share were unchanged from a year ago and beat analyst estimates of 17 cents.

“This is clearly a notch higher performance,” said Nicholas Heymann, an analyst at William Blair. “They had to hit a bunch of metrics and they hit most of them.”

GE is looking to regain momentum after the oil-price slump and sluggish economy constrained growth last year and weighed on the stock price. The company agreed last month to reduce costs further, following talks with shareholder Trian Fund Management, increasing pressure on Mr Immelt.

GE said industrial organic revenue, which is from continuing businesses, rose 7 per cent in the quarter, a strong showing according to analysts. Earnings from continuing operations attributable to GE shareholders rose to $858 million in the quarter ended March 31st, from $248 million a year earlier. – Reuters / Bloomberg