- GE Renewable Energy has posted a $195 million loss for the second quarter of 2020, totaling a $498 million loss in the segment for the year.
- The company reported a 19% decline in second-quarter orders, driven primarily by delays in U.S. onshore wind and grid projects put on hold due to COVID-19. However, GE company officials believe these orders will return as projects resume in the latter half of 2020 and 2021.
- Revenue from the renewable energy division increased 9% in the first half of 2020, driven by rising prices and progress on GE cost-cutting initiatives.
GE's overall revenues are down 20% after what company officials characterized as a “very challenging second quarter.” Company leadership still hopes to stem the bleeding with its ongoing cost-cutting projects, and they see signs of hope on the horizon, particularly within the firm's renewable energy division.
GE Renewable Energy and Healthcare proved to be the two bright spots in an otherwise bleak quarterly report. Similar to the Renewable Energy division, the Healthcare division reported an 18% decrease in orders and $550 million in losses, while aviation and gas power divisions reported 56% and 42% decreases in orders, respectively.
GE CFO Carolina Happe said GE expects the lost renewable energy orders will get back on track in the latter half of 2020.
“These orders [were] pushed to the second half due to financing and permitting delays related to COVID-19,” Happe told analysts during a July 29 earnings call. “Indications suggest that these are genuine delays versus cancellations that we are actively monitoring.”
Happe pointed to international onshore wind orders as a “bright spot,” with orders up more than 30% as Europe's post-COVID recovery progresses. The renewables section also saw a 9% increase in revenue over the first half of 2020, driven by improved onshore wind pricing and lower project costs.
Happe also reported that GE Renewable Energy cut 600 jobs last quarter as part of a $2 billion company-wide cost-cutting initiative.
GE Power reported a $40 million loss in Q2, driven by decreased service volumes and an 84% decrease in equipment orders. Happe said GE expects equipment orders will recover over the course of the year, but service orders could struggle for some time.
“So clearly this was a tough quarter, and the COVID-19 dynamics continue to evolve with global cases rising,” CEO Larry Culp said. “We acknowledge that the full duration, magnitude and pace of this pandemic across our end markets operations and supply chains is still unknown. The macroeconomic environment could deteriorate further before it recovers.”
However, Culp said he anticipates a “steep market decline” through the end of 2020 followed by a “slow, multi-year recovery.”