General Electric conglomerate continues to reduce debt and improve profitability
Technology company General Electric Co. (GE) improved profitability despite declining revenue in the third quarter. In addition, the conglomerate’s debt continues to decline rapidly. As a result, the COVID-19 pandemic is still having an impact on General Electric’s business.
But the company is showing resilience and signs of recovery. General Electric’s total revenue in the third quarter decreased by 1% year-on-year to $18.4 billion. The main growth drivers are the aviation and healthcare segments, although problems with supply chains are still relevant for these areas.
Against the background of high demand and limited supply, General Electric improved profitability, even with reduced revenue. The healthcare division maintained a margin of 16.2%, generating an operating profit of $704 million.
Recovery in demand for services, the aviation segment increased the margin to 15.7% compared to 7.1% a year earlier and 8.3% in the first half of 2021. As a result, the segment’s profit amounted to $846 million, more than in the first two quarters combined.
High profitability in two large divisions helped General Electric compensate for losses in the renewable energy division and support the weak growth of the electricity generation and distribution division. General Electric must continue to solve balance sheet problems. The company ended the last quarter with a debt of $63 billion, part of which by $25 billion in cash.
At the beginning of this week, the company completed the sale of the aircraft leasing business, receiving cash proceeds of at least $24 billion. In addition, General Electric still owns about $5 billion worth of Baker Hughes shares. All of this will allow the company to reduce its debt over the next year or so significantly.
Thus, General Electric is rapidly improving its balance sheet and maintaining high profitability indicators. As the global economy recovers and supply chain issues, the company will return to growth. At the auction on November 3, GE’s stock was worth $106.69.
