The U.S. General Electric Company’s second-quarter performance report released on the 27th showed that despite the significant increase in revenue, like many companies that have recently announced their financial reports, their performance prospects are under threat of inflationary pressures, and product price increases are inevitable.
General Electric’s financial report showed that the company’s total orders and total operating income in the second quarter were 18.355 billion US dollars and 18.279 billion US dollars, up 33% and 9% year-on-year, respectively. The operating income was higher than market expectations of 18.14 billion US dollars.
Affected by this, under non-GAAP, the General Electric Industrial sector achieved free cash flow of US$388 million in the second quarter, compared with a negative US$2.067 billion in cash flow in the same period last year. Adjusted earnings per share were 5 cents, better than market expectations of 3 cents and minus 14 cents in the same period last year.
However, under the GAAP, GE’s net loss per share in the second quarter was 14 cents, better than the 26 cents per share loss in the same period last year.
General Electric raised its full-year free cash flow forecast for the industrial sector from US$2.5 billion to US$3.5 billion to US$3.5 billion to US$5 billion. Expectations remain unchanged.
In the second quarter, GE’s largest aviation sector orders and operating income were 5.492 billion U.S. dollars and 4.84 billion U.S. dollars, representing a year-on-year increase of 47% and 10%, respectively.
General Electric Chairman and CEO Larry Culp also said that operating profit margins in all sectors have improved. Driven by the medical and service sectors, business growth momentum is accumulating, and the aviation sector is showing early signs of recovery. General Electric is transforming into a more focused, simple and powerful high-tech industrial enterprise, driving more organic growth, and investing in breakthrough technologies.
Culp said in an interview with the media that General Electric has not been immune to inflation, and inflationary pressures will be even greater in the second half of the year. General Electric manages inflationary pressures by raising prices, improving procurement of parts and raw materials, eliminating waste, and increasing productivity.
Industrial manufacturer 3M announced its latest quarterly report on the 27th and also warned that the soaring cost of raw materials and freight will affect its annual profit and also affect its second-quarter results. 3M’s financial report data showed that the company’s second-quarter sales increased by 24.7% year-on-year to US$8.9 billion, higher than market expectations of US$8.56 billion. The financial report shows that 3M raised product prices, but failed to offset the impact of rising costs, which also put pressure on the profit margins of some businesses. The company raised its full-year raw material and logistics expenses from its previous forecast of US$0.3-0.5 per share to US$0.65-0.8 per share.
3M CEO Roman said that inflation will continue to exert pressure on the company in the second half of the year. From polypropylene, chemicals to other raw materials, as well as logistics and labor prices, there is still no sign of easing the pace.
An analysis report released by Bank of America this week pointed out that the number of times that listed companies mentioned “inflation” in their earnings call in the second quarter of this year has increased by more than 1,000%, or 10 times, compared with the same period last year. In the past few weeks, many companies have also mentioned on conference calls that they will use price increases to counter rising labor, raw materials and other costs.