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Revenues down, but division still turns a profit

GE’s Power division saw revenues drop 11% in the first quarter, but still managed to eke out a profit.

For the three months ending March 31, the division saw revenues US$.4 billion while earning a profit of US$.1 billion driven in large part by a decrease in equipment revenues on fewer HA shipments and steam power equipment as the company exits the coal-fired market segment. The company reported sales of 20 gas turbines in the quarter, which was up from 11 in the same quarter of 2021. HA turbine sales dropped from 5 in the first quarter of last year to two this quarter.

Orders of US$4.2 billion increased 14% in large part because of strong equipment growth with heavy duty gas turbine and aeroderivative orders both up. Services orders also increased. Revenues of $3.5 billion decreased 11% reported and 6% organically. The profit margin of 1.8% expanded 400 basis points reported with margin improvement at Gas Power as well as Steam due to increased focus on services, reduced cost structure, and project and legal charges from last year that did not repeat.

“Looking ahead, we anticipate the power market to continue to be impacted by overcapacity in the industry, continued price pressure from competition on servicing the installed base, and the uncertain timing of deal closures due to financing and the complexities of working in emerging markets, as well as the ongoing impacts of COVID-19,” the company reported. “Although market factors related to the energy transition such as greater renewable energy penetration and the adoption of climate change-related policies continue to impact long-term demand (and related financing), to differing degrees across markets globally, we expect the gas market to remain stable over the next decade with gas generation continuing to grow low-single-digits.

“We believe gas will play a critical role in the energy transition and are encouraged by the growth in Gas Power Services. We remain focused on our underwriting discipline and risk management to ensure we are securing deals that meet our financial hurdles and we have high confidence to deliver for our customers. We continue to invest in new product development, such as our HA-Turbines and Nuclear small modular reactors. Our fundamentals remain strong with approximately US$67.8 billion in RPO and a gas turbine installed base greater than 7000 units, including approximately 1750 units under long-term service agreements.”