GE Aerospace's Stock Plummets 9% Amid Mixed Earnings and Positive Outlook Adjustments
1min read GE Aerospace experienced a notable market shift on October 22, with a significant 9.05% drop, hitting its lowest point since September 2024. Despite this dip, the company presented a mixed bag in its third-quarter earnings report. Adjusted sales reached $8.9 billion, slightly below the projected $9 billion, though adjusted earnings per share were $1.15, surpassing the anticipated $1.13.
The upward revision of the annual earnings outlook highlights GE Aerospace's strong performance in orders and maintenance services. The company now forecasts adjusted earnings per share to be as high as $4.35, compared to the previous expectation of $4.20, and has also increased its free cash flow guidance.
As GE Aerospace adjusts to industry fluctuations, including supply chain bottlenecks and Boeing's production cuts, it continues to deliver meaningful progress. Following its spin-off in April, the company has become an independent entity with a focus on increasing aircraft engine output without compromising safety or quality, as stated by CEO Larry Culp.
The commercial engines and services sectors have remained resilient, with last quarter's orders surging by 29% year-over-year. Driven by increased parts sales, passenger traffic, and pricing improvements, the services business saw a 10% growth.
In contrast, the defense and propulsion sectors showed a mixed performance, recording a 2% revenue increase but an 18% drop in profits to $220 million, partly due to inflationary pressures.
GE Aerospace has faced supply chain hurdles, attributed to smaller manufacturers struggling to find skilled workers who retired or resigned during the pandemic. This has led to a shortage in the delivery of Leap engines to Airbus, caused by a lack of high-pressure turbine blades.
Reductions in Leap engine production were adjusted to a 5% increase in July. However, this shortfall may prompt customers to extend the use of the older CFM56 engines, potentially boosting GE's maintenance business.
The company is also divesting certain assets and addressing legacy issues, such as completing the sale of the licensing business to Dolby Laboratories, gaining $341 million in pre-tax profit. Additionally, GE Aerospace has incurred a $328 million pre-tax charge related to resolving a legacy shareholder lawsuit agreement.
