BOSTON — General Electric quantified the continued impact of the COVID-19 crisis on Wednesday, reporting a second-quarter decrease of 38 percent in orders and 28 percent in revenue compared with the same three months of 2019.
GE’s $17.75 billion in revenue was better than industry analysts expected and its 15 cent loss per share was worse than expected. Its stock closed at $6.59 in lighter-than-average trading, down 4.35 percent from Tuesday’s close on a day when the S&P 500 index was up 1.24 percent.
The message from CEO H. Lawrence Culp Jr. in a Tuesday-morning presentation to analysts was similar to his message when reporting first-quarter results: The pandemic has hit the company hard and its full impacts can’t be judged yet.
“So clearly this was a tough quarter and the COVID-19 dynamics continue to evolve with global cases rising,” Culp said. “The macroeconomic environment could deteriorate further before it recovers.”
General Electric, with customers around the world and operations in over 100 other countries, was hit early and hard by the onset of the pandemic. In China, where the virus originated and where GE has a large presence, its supply chain was disrupted and its facilities were slowed or shut down.
Widespread disruptions in the United States and the rest of the world followed, all of it as the money-losing GE was attempting to remake itself into a smaller, more financially healthy company.
One of the biggest impacts on GE’s bottom line was the near-shutdown of civilian air travel, reducing sales and service for the company’s biggest component business, GE Aviation. Aviation was already suffering in the wake of the decision after two crashes to ground the popular Boeing 737 airliner, which is powered by GE engines.
Aviation was a central thread in the GE presentation and in analysts’ questions Tuesday.
GE Chief Financial Officer Carolina Dybeck Happe said Tuesday that Aviation cut its workforce by 5,400 people, 11 percent of its total, in the second quarter.
Significant cutbacks also have been made at other GE businesses, including 1,500 in the first and second quarters at GE Power, the struggling business formerly headquartered in Schenectady.
“We continue to take cost actions across Power, which includes roughly 800 headcount reductions in this quarter,” she said. “Gas Power had a positive operating profit this quarter with fixed costs down 13 percent year-over-year.”
She said the goal is a 25 percent reduction in GE’s global workforce.
Even GE Healthcare, which has pivoted rapidly to respond to the COVID-19 crisis, has cut about 600 positions as its business model changes. Culp said Healthcare in the second quarter began delivering the first of 50,000 respiratory ventilators it is building with Ford under a $300 million federal contract. He expects the remainder to be delivered in the third quarter.
Some of the deepest cuts have come at the headquarters of the conglomerate. The headcount is down by more than 50 percent — about 14,500 jobs eliminated or transferred, including 400 in the second quarter of 2020 — as Culp continues his strategy of downsizing the corporate structure and moving control to the component businesses.
Culp offered the same guarded optimism that has been his frequent tone in his nearly two years running the company.
“Better earnings and cash performance in the second half are achievable based on what we see today and the aggressive actions we’ve taken,” he said. “As Carolina said, we do have work to do and the environment is still fluid. It remains a game of inches.”