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GE Oil & Gas profits dip

Revenues also drop due to challenging market environment amid low commodity prices

US engineering giant GE  saw its oil and gas profits dip in the first quarter of this year even as total earnings beat analyst estimates.

GE Oil & Gas booked a 33% drop in profits year-on-year from $308 million in the first quarter of 2016 to $207 million in the same period last year.

Revenues also dropped 9% from $3.3 billion last year to about $3 billion this year. GE blamed the decrease on a challenging market environment and lower volumes amid low commodity prices. In particular, revenues for its subsea and drilling unit fell 31% while revenues for its surface unit dropped 6%. Meanwhile, its turbomachinery and downstream unit saw a 2% rise in revenue, while the digital solutions unit booked a 1% increase in revenue.

However, the company did see a 7% increase in orders, driven by a 13% increase in subsea and drilling.  Orders for turbomachinery and downstream also climbed 7%, while surface orders edged up 2%. Only digital solutions saw a decline in orders, which decreased 3%.

Overall, GE beat analysts estimates for adjusted earnings and revenue, even though revenue fell 1% to $27.66 billion, due to the lower sales in the oil and gas unit as well as in its and lighting business. Analysts expected $26.26 billion, according to Thomson Reuters.

Adjusted earnings of 21 cents a share were unchanged from a year ago and beat analyst estimates of 17 cents, according to Thomson Reuters.

GE said industrial organic revenue, which is from continuing businesses, rose 7% in the quarter, a strong showing according to analysts.

However, its shares fell on concerns about some of its industrial businesses. Shares were down 1.7% at $29.75 in mid-morning trading, making it the biggest decliner on the Dow Jones Industrial Average.

In addition, the company also reported a negative $1.6 billion in cash flow from industrial operating activities compared with a negative $600 million it expected for the quarter due to a $1.3 billion increase in working capital and the timing of bills to customers.

Investors have been watching cash flow as an indicator of GE's operating performance, and GE said it still expects to hit its cash target of $12 billion to $14 billion for the full year.