GE Aerospace (GE, Financial) announced mixed financial results for the third quarter. The company's adjusted sales totaled $8.9 billion, slightly below market expectations of $9 billion. However, the adjusted earnings per share (EPS) came in at $1.15, slightly exceeding the anticipated $1.13. Despite the mixed results, GE Aerospace raised its full-year earnings guidance, attributing strong orders and service business performance as key factors.
The company now forecasts adjusted EPS to reach up to $4.35 for the year, up from the previous forecast of $4.20. Additionally, it has increased its free cash flow guidance. GE Aerospace is adapting to the fluctuating aviation sector, which is currently challenged by supply chain bottlenecks and reduced production by aircraft manufacturer Boeing (BA).
Having spun off from General Electric in April, GE Aerospace became an independent public company. CEO Larry Culp emphasized the company's commitment to boosting aircraft engine production without compromising on safety or quality. He noted significant progress with over a 20% increase in engine deliveries quarter-over-quarter and expanded aftermarket capabilities. The commercial engine and service segments continued stable performance, with orders growing 29% compared to the same period in 2023, and a 10% increase in service business driven by spare parts sales, increased traffic, and improved pricing.
The defense and propulsion segment reported mixed results, with revenues growing by 2% but profits declining 18% to $220 million, partly due to inflation pressures.
GE Aerospace is currently facing supply chain challenges, mainly because smaller manufacturers struggle to find skilled workers who retired or resigned during the pandemic. A shortage of high-pressure turbine blades has recently led to a shortfall in Leap engine deliveries to Airbus. The company reduced the production increase for Leap engines to 5% in July, but the shortage might lead customers to extend the use of its predecessor, CFM56 engines, thus boosting the maintenance business.
Moreover, GE Aerospace is divesting certain assets and addressing legacy issues. It completed the sale of its licensing business to Dolby Laboratories (DLB), receiving a pre-tax gain of $341 million. The company also reported a pre-tax charge of $328 million related to a settlement agreement addressing legacy shareholder litigation.
In pre-market trading, GE Aerospace shares fell nearly 5%, although the stock has gained 92% this year, outperforming the S&P 500 index.
