On April 2, General Electric (GE, Financial) successfully spun off its power generation unit, GE Vernona (GEV, Financial), marking a significant shift to focus solely on its aerospace division, now known as GE Aerospace (GE). This transition was highlighted in its latest quarterly earnings, which, despite including GE Vernona's figures for one last time, showcased strong momentum for GE. The report revealed a 34% year-over-year increase in total orders to $11.0 billion and a 24% rise in operating profit to $1.5 billion, underscoring robust demand in both commercial and defense sectors.
GE Aerospace's operations are now streamlined into two main segments: Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT). CES, being the larger segment with $6.1 billion in revenue (up 16% year-over-year), has seen significant growth thanks to increasing maintenance and repair demands from commercial airlines. This demand is partly driven by Boeing's (BA, Financial) ongoing challenges with its 737 MAX jet, boosting services orders by 18% in Q1. The equipment side also saw a remarkable 78% order growth, fueled by strong demand for the LEAP turbofan engine, produced by GE's joint venture with Safran Aircraft Engines, CFM International, for Airbus's (EADSY, Financial) A320neo jet.
The DPT segment witnessed a 34% jump in orders to $3.0 billion and a 26% increase in operating profit to $300 million, benefiting from the current volatile geopolitical climate and sustained demand for GE's military-provided engines, propellers, flight control, and power generation components.
Reflecting the optimistic outlook for both CES and DPT, GE has revised its FY24 guidance upwards, now expecting low-double-digit adjusted revenue growth and operating income between $6.2 and $6.6 billion, an improvement from its previous forecast. This adjustment underscores the continued strong demand for aerospace products as the travel industry rebounds and governments increase their defense spending.
