Ge Aerospace ((GE)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call from GE Aerospace painted an optimistic picture for the company, highlighting strong revenue and profit growth, a robust order backlog, and a positive long-term outlook. Despite challenges such as tariff impacts, inflation, and expected losses related to new platform ramps, the overall sentiment remained upbeat, buoyed by the company’s solid market position and increased financial guidance.
Revenue Growth
GE Aerospace reported a remarkable 23% increase in revenue for the second quarter of 2025. This growth was driven by a 30% surge in Commercial Engines & Services and a 7% rise in Defense & Propulsion Technologies, showcasing the company’s strong performance across its key segments.
Order Increase
The company experienced a substantial 27% year-over-year increase in orders, signaling robust demand in both the commercial and defense sectors. This growth in orders underscores the strength of GE Aerospace’s market presence and its ability to capture new business opportunities.
Profit and Margin Expansion
Operating profit for GE Aerospace reached $2.3 billion, marking a 23% increase year-over-year. Margins expanded to 23%, driven by improvements in service volume and pricing, reflecting the company’s effective cost management and strategic pricing initiatives.
Strong Backlog
GE Aerospace boasts a formidable commercial services backlog exceeding $140 billion, with a total order backlog of 1,600 engines. This robust backlog effectively secures the company’s sales through the decade, providing a stable foundation for future growth.
Positive Long-term Outlook
Looking ahead to 2028, GE Aerospace has raised its profit and free cash flow outlook by $1.5 billion, anticipating double-digit revenue growth and substantial free cash flow of at least $8.5 billion. This optimistic forecast highlights the company’s confidence in its long-term growth trajectory.
Supply Chain Improvement
The company reported a 10% sequential increase in material input at priority supplier sites, with suppliers delivering over 95% of committed volume. These improvements in the supply chain are crucial for supporting GE Aerospace’s growth and operational efficiency.
New Technology and Investment
GE Aerospace is making significant investments in new technologies, including AI-enabled tools for engine inspections and over $1 billion in MRO and component repair facilities. These investments are expected to enhance the company’s technological capabilities and competitive edge.
Impact of Tariffs
The company anticipates that reciprocal tariffs will have a net impact of approximately $500 million in 2025. However, GE Aerospace plans to mitigate these effects through cost controls and pricing actions, demonstrating its proactive approach to managing external challenges.
Challenges in Second Half 2025
Despite improved full-year expectations, the company acknowledges a nearly $500 million lower EBIT in the second half of 2025 compared to the first half. This guidance reflects the challenges GE Aerospace faces in maintaining its momentum amidst external pressures.
GE9X Losses
Incremental losses related to the GE9X platform are expected to be a few hundred million dollars higher in 2028 versus 2025 due to increased volume. This projection highlights the financial challenges associated with ramping up new platforms.
Rising Inflation
GE Aerospace anticipates that supply chain materials will remain tight, contributing to a sustained high inflationary environment. The company expects to offset these pressures through strategic pricing actions, ensuring its financial stability.
Forward-looking Guidance
During the earnings call, GE Aerospace provided revised guidance, projecting mid-teens revenue growth and operating profit between $8.2 billion to $8.5 billion for fiscal year 2025. Adjusted EPS is expected to range from $5.60 to $5.80. Looking further ahead to 2028, the company anticipates operating profit to reach approximately $11.5 billion, with margins expanding to over 21% and free cash flow of at least $8.5 billion. These forecasts reflect the company’s strong growth prospects and strategic focus on commercial services.
In conclusion, GE Aerospace’s earnings call conveyed an optimistic outlook, driven by strong revenue growth, a robust order backlog, and positive long-term forecasts. Despite challenges such as tariffs and inflation, the company’s strategic initiatives and market position provide a solid foundation for future success.