The hottest General Electric Q3 is expected to ush

Ge Q3 is expected to usher in month on month improvement, and the review of two major businesses has become the focus of attention

Zhitong finance app learned that before the US stock market on October 28 (Wednesday), Ge () will announce its financial results for the third quarter of 2020

analysts believe that GE's quarterly financial report is likely to reflect the impact of the health pandemic on its operations. In addition, since May this year, the strong performance and cost saving actions of the digital business of the product are expected to be reflected in the performance. Although previously, the company did not provide performance guidance for the third quarter

zacks predicts that Q3 General Electric will record a loss of $0.08 per share in the third quarter and a earnings per share of $0.15 in the same period last year; Its revenue is expected to be US $19.149 billion, a year-on-year decrease of 18% and a month on month increase of 7.9%

for business segments, Zacks expects the revenue of the health care sector to be $4.106 billion, a year-on-year decrease of 16.6% and a month on month increase of 5.5%; The revenue of the power sector is expected to be $3.845 billion, down 2.1% year-on-year and 7.4% month on month; The revenue of the aviation sector is expected to be $4.772 billion, a year-on-year decrease of 41.2% and a month on month increase of 8.8%; It is expected that the revenue of renewable energy sector will be US $4.555 billion, with a year-on-year increase of 2.9% and a month on month increase of 30%

normalization of core business

in the second quarter, the company received total orders of US $13.8 billion, a year-on-year decline of 38%, and a year-on-year decline of 35% on an organic basis. Among them, the aviation sector was the hardest hit, with revenue falling by 44% year-on-year, mainly due to airlines' sharp reduction in flight activities and aircraft manufacturers' corresponding slowdown in production speed, resulting in a decline in this part of revenue. In addition, affected by the health incident, the public's demand for medical care is expected to further increase, which bodes well for GE Healthcare

the company also reported that due to health incidents, some power projects were postponed and there were fewer medical projects that could be operated in the hospital, the revenue of its power sector fell by 11% year-on-year, and the revenue of its health care sector fell by 21% year-on-year

the good news is that in Q2, the revenue of its renewable energy sector increased by 1% year-on-year on an organic basis, while the organic growth in the first quarter was 28%

analysts mentioned that the third quarter earnings report will help investors understand whether the power and renewable energy projects that have been postponed since the second quarter are moving forward again. At the same time, although the airline industry is showing signs of slow recovery, compared with the spring, airlines have been stepping up flight arrangements, which may promote the revenue growth of their aviation sector month on month

analysts reminded investors to pay close attention to GE's performance guidance for the fourth quarter. Last month, CEO Larry cup said that the company is expected to generate positive industrial free cash flow in the second half of 2020, after the company consumed $4.3 billion in the first half of the year. However, in recent weeks, the number of new cases of health incidents in Europe and the United States has risen sharply. Therefore, during the third quarter earnings meeting, the management may talk about the potential impact of the company's response to health events on its business

focus on two business reviews

Ge will also provide updates on two important businesses related to its subsidiaries this week. First, the company conducted a comprehensive review of the investment portfolio of GECAS aircraft leasing department. In the second quarter earnings report, due to the review of high-risk customers, the company incurred an impairment charge of about $300million, and the comprehensive review in this quarter may lead to additional expenses

secondly, the company completed the annual review of potential premium defects in its insurance business in the third quarter. This is a business arrangement that has attracted much attention. In particular, Harry Markopolos, an American accounting expert, previously issued a report accusing ge of accounting fraud for decades, believing that the company lost $29billion in this business. Therefore, this review will bring a pre tax cost of $1billion, mainly due to the impact of lower interest rates. In the past year, interest rates have fallen further, increasing the possibility of charging again this year

however, analysts say that health incidents are a big obstacle. Three months ago, the management of the company using the temperature range (frequency, Mongolian temperature characteristics, thermal oxidation stability, low temperature activity) pointed out that the claims of the long-term care insurance department had decreased significantly, but the number of people who terminated insurance had increased. If this trend continues into the third quarter, they are likely to offset the adverse effects of lower interest rates

is the company ready to use excess cash

Ge sold its biopharmaceutical division for $21billion earlier this year and made a lot of money from it. At the end of the second quarter, the company had more than $41billion in cash. Affected by the uncertainty of health events, the company pays more attention to cash storage than usual

however, if the assessment of GE's insurance business unit does not show any major danger signals, and the business situation of the industrial sector is more stable, the company may start to use some of the excess cash. Part of the $16billion held by general finance will need to be used to repay the $5billion debt that will mature in the second half of the year. Earlier this year, Ge also planned to pay $4billion to $5billion in pensions and pay off $4.7 billion in loans related to general finance

analysts believe that if Ge continues to take positive actions or other deleveraging measures, investors should believe that the company is constantly consolidating its financial foundation. In contrast, if Ge continues to hoard cash, it will show that management is still nervous about the business environment