GE Aerospace (GE 1.05%) is stepping forward as a stand-alone business after General Electric spun off its renewable energy and power businesses into GE Vernova. Here's a summary of the company's quarterly filing.
A new look for GE
GE completed a significant restructuring by spinning off its renewables and power business into a new, independent entity named GE Vernova. The spin-off was executed as a tax-free distribution of GE Vernova shares to existing GE shareholders.
General Electric has been rebranded as GE Aerospace, specializing in aerospace propulsion, services, and systems. Aerospace was the largest, fastest-growing, and most profitable of the old combined company's three business segments.
What you need to know about GE's aerospace business
Aerospace revenue grew 16% to $8.1 billion in the first quarter, while segment profit grew 15% to $1.5 billion. The aerospace business' profit margin was 19%, well ahead of both power (2%) and renewable energy (almost 15% negative). Aerospace made up 53% of the combined company's organic revenue.
While GE Aerospace serves both commercial and defense customers and offers both services and equipment, it reports a 70-30 revenue split in favor of both commercial and services. It lists air departures as the primary driver of its commercial business, and that metric increased 11% in the quarter, with the Chinese market showing notable strength.
Investors should monitor several critical factors moving forward. The variability in regional air traffic growth, driven by economic conditions, competitive landscape, and regulatory changes, could impact the company's performance. Additionally, ongoing supply chain challenges and inflationary pressures remain pertinent issues. GE Aerospace is investing in improving manufacturing and supply chain capabilities as a result.
What's Next for GE Aerospace?
General Electric, now streamlined as GE Aerospace, has embarked on a focused journey in the aerospace sector following the spin-off of GE Vernova. The new focus might make it easier for investors to follow the company's fortunes. At the same time, the narrower focus means the ups and downs of a single industry will become more important for the new company.
