The company said its outlook for the year is an adjusted earnings-per-share range of $1-1.07 and industrial free cash flows of approximately $6 billion for the year.
GE Chairman and CEO John Flannery said: “We are progressing on our plans to make GE simpler and stronger. We closed the Industrial Solutions and Value-Based Care transactions; announced plans to separate GE Healthcare into a standalone company over 12-18 months, pursue an orderly separation of BHGE over 2-3 years, and combine GE Transportation with Wabtec; and announced the sale of Distributed Power to Advent International for $3.25 billion.”
In June, Flannery disclosed that the core of GE would consist of its Aviation, Power and Renewable Energy businesses and announced plans to move GE Healthcare, Baker Hughes, a GE company (BHGE), and GE Transportation out of the GE core to “enable them to pursue more focused growth strategies as standalone companies.” GE also continues to work to make GE Capital smaller and more focused on supporting its core industrial businesses.
GE reduced industrial structural costs by $1.1 billion in the first half of the year and is more than halfway toward its 2018 goal of more than $2 billion. GE’s adjusted industrial free cash flows improved in the first half year over year, and the company plans to end 2018 with more than $15 billion of cash.
“With our strategic review now complete, GE is moving forward to implement the strategy and structure we laid out in June,” said Flannery. “Our focus is on unrelenting execution of this plan to improve operating results, strengthen our balance sheet, accelerate growth across our businesses and increase shareholder value.”
GE Aviation continued to display strength. Orders in the second quarter totaled $9.5 billion, up 29 percent from the same period a year ago. Revenues in the quarter grew 13 percent to $7.5 billion, and the company shipped 250 LEAP engines versus 69 in the second quarter of 2017. Equipment orders grew 62 percent, driven by key wins in GEnx and continued LEAP momentum. Not included in orders are the more than $22 billion in orders and commitments recently announced at the Farnborough International Airshow in England.
GE reported good growth in Healthcare with orders of $5.3 billion, up 7 percent reported from the same period a year ago. Healthcare revenues of $5 billion grew 6 percent reported. The Healthcare team made further progress on portfolio actions in the second quarter with the sale of the Value Based Care portfolio of Healthcare Digital to Veritas Capital in July. While still early in the process, the team is also progressing on the announced plan to create a standalone GE Healthcare company over the next 12-18 months.
GE Power orders of $7.4 billion were down 26 percent, and revenue was down 19 percent. First-half trends continue to indicate a gas power market of less than 30 gigawatts in 2018, and orders softness resulted in lower progress collections. Flannery said he expects the power market to remain challenging. “We continue our focus on operational improvement,” he said.
GE Renewable Energy orders of $1.7 billion were down 15 percent, principally driven by timing as first-half orders versus last year were flat. Despite the decline in wind turbine orders in the second quarter, a strong global demand for onshore wind continues with its backlog growing 32 percent versus the prior year. Revenue for the business in the second quarter was down 29 percent.
For more highlights, see the infographic below, and you can get more information about GE’s second-quarter earnings on its investor website.