GE Aerospace has raised its forecast for the current fiscal year and is optimistic that the recent easing of the trade dispute between the USA and China will have a positive impact on business in the world's second-largest economy. The US engine manufacturer expects a significant increase in demand, particularly for its high-margin commercial engine business.
For the second quarter, the company reported a revenue jump of 21% to $11 billion. Net profit increased by 60% to $2 billion. A major order from Qatar Airways and easing economic concerns supported the result. GE Aerospace also benefited from increased demand for spare parts and maintenance services.
Finance chief Rahul Ghai told analysts that the risks for deliveries to China had decreased due to eased tariff threats. The USA had recently concluded agreements with the United Kingdom, China, Vietnam, and Indonesia, although so far only a written contract exists with London. The agreement with the United Kingdom, for example, guarantees tariff-free engine deliveries and is considered a blueprint for further agreements.
Against this background, GE Aerospace raised its full-year forecast. The company now anticipates revenue growth in the "mid-teens" percentage range, after expecting "low double-digit" increases in April. Expectations for operating profit and free cash flow were also raised. Ghai still estimated the impact of existing tariffs at $500 million.
The company also announced that it plans to increase its capital returns to shareholders from 2024 to 2026 by 20% to $24 billion. In the future, at least 70% of free cash flow is to be distributed to shareholders through dividends and share buybacks. GE Aerospace is also more optimistic for the period up to 2028: Double-digit percentage annual revenue growth is now expected, whereas previously only a "high single-digit" figure had been forecast.
CEO Larry Culp also commented on the crash of the Air India plane on June 12. The Boeing 787 was equipped with GE engines. However, the initial investigations saw no need for action against GE or Boeing. Culp expressed his sympathy to the victims' families and promised further cooperation with the authorities.
On the stock market, investors nevertheless reacted cautiously: The share initially lost about 2% in New York on Thursday.
