Investing.com - General Electric (NYSE:GE) disappointed with its first quarter earnings Wednesday, as its Aviation division was hard hit by the ongoing Covid-19 crisis.
The multinational conglomerate announced earnings per share of $0.05 on revenue of $20.52 billion, compared with expectations of EPS of $0.08 on revenue of $20.27 billion.
The company said that Covid-19 factors hit its industrial profit by $0.7 billion in the first quarter. The second quarter will be the first full quarter with pressure from Covid-19, and thus GE expects that its financial results will decline sequentially. GE pulled its guidance for 2020 earlier in April.
At 7:18 AM ET (1050 GMT), shares traded 2.9% lower premarket, still down 39% from the beginning of the year.
“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," said GE Chairman and CEO H. Lawrence Culp (NYSE:CULP), Jr.
GE is taking steps to survive the difficult circumstances, targeting more than $2 billion in operational cost cuts and $3 billion of cash preservation in 2020 to mitigate the financial impact.
However, "there is hardly any good news for GE in the current environment when the industrial economy is at a standstill," said Haris Anwar, an analyst at Investing.com..
"One of the biggest setbacks for GE’s turnaround will come from the aviation division, which was generating positive cash flows. While the military business is mostly unaffected, the commercial aviation business faces a very bleak future in the short-run after the coronavirus pandemic. That situation makes GE’s turnaround more complicated and its stock a risky bet even at rock-bottom level."