General Electric reported a drop in second-quarter earnings Friday amid continued headwinds in its power generation division, sending shares sharply lower.
The slumping US industrial giant said profits fell to $615 million, down 29.7 percent from the year-ago levels.
Revenues rose 3.5 percent to $30.1 billion.
GE’s valuation has plummeted over the last two years due to weak market conditions in two of its largest divisions, power, and oil and gas. The company was kicked out of the prestigious Dow index in June.
In the second quarter, oil and gas saw a jump in revenues as more petroleum companies pursued projects amid rising prices.
GE’s aviation and healthcare businesses also had higher year-over-year profits, although profit margins in the aviation division dwindled compared with the prior quarter.
But GE’s power division continued to languish, with orders, revenues and segment profit all falling. Executives signaled they would need to deepen cost cuts.
GE chief executive John Flannery said the company sees the overall market for gas power turbines has shrunk from the level a few years ago and would stay at low levels through 2020.
“We’re going to continue to have to take additional costs out,” Flannery said. “We can do that. We will do that. But’s going to take some time.”
Flannery expressed confidence in the power business in the long term and in a strategic reorganization unveiled in June that calls for exiting the healthcare and oil services business.
“We are progressing our plans to make GE simpler and stronger,” Flannery said.
But a note from JPMorgan Chase cited several weak points in the report, including a cut in the company’s 2018 outlook for free cash flow, a closely-watched metric that can is tied to shareholder dividends, and the pallid performance in aviation.
“A miss to even our below-consensus thoughts, with forward implications that are negative,” the JPMorgan note said.
Shares were down 4.7 percent to $13.09 in late-morning trading.