April 25 (Reuters) – General Electric Company increased the low end of its profit prediction for the entire year on Tuesday. The company was encouraged by the robust demand for jet engine spare parts and services on the back of a solid rebound in air travel.
The industrial giant with headquarters in Boston, Massachusetts, now anticipates an adjusted profit per share in the range of $1.70 to $2.00 for the year 2023, which is an increase from its prior prediction of $1.60 to $2.00.
When compared to the range of $3.4 billion to $4.2 billion that was anticipated earlier, it is anticipated that the free cash flow for the year will be in the range of $3.6 billion to $4.2 billion.
As a result of disruptions in the supply chain, airlines have been compelled to deploy older aircraft, which has led to an increase in demand for aftermarket services. A quick recovery in aviation from the depths of the epidemic has raised the performance of engine producers.
The aviation division of GE is the company’s cash cow, and it produces engines for wide-body planes manufactured by Boeing Co. Its joint venture with Safran SA of France, known as CFM International, is what powers the 737 MAX jetliners produced by Boeing as well as the 320neo planes produced by Airbus.
Price hikes and advances in productivity helped lessen the pain of industry-wide supply shortages and rising inflation, which led to a 25% rise in the unit’s revenue in the first quarter compared to the same period last year, which came in at $6.98 billion.
Melius Studies analyst Robert Spingarn wrote in an email earlier this month that “given the pent-up demand for flights and a lack of aircraft in recent years due to the worldwide epidemic, commercial aviation (aftermarket and OE) will likely be the most rapidly expanding industrial end-market for the next few years.” Spingarn made these statements in reference to the commercial aviation aftermarket and original equipment manufacturer markets.
In comparison, General Electric‘s adjusted profit for the quarter that ended in March was 27 cents per share, whereas the company posted a loss of 9 cents per share in the same period a year earlier.
According to Refinitiv’s findings, market analysts, on average, anticipated a profit of 14 cents per share. There was an initial lack of clarity over whether or not the data were comparable.
Additionally, this was the first quarter since 2015 that GE has reported a positive free cash flow. During trading that took place before the opening bell, the company’s stock price inched up 1.3%. (Rajesh Kumar Singh in Chicago and Abhijith both Ganapavaram in Bengaluru contributed reporting; Mark Porter, Anil D’Silva, and Emelia Sithole-Matarise were responsible for editing)