General Electric Company’s ( GE Quick Quote GE - Free Report) unit, GE Renewable Energy, yesterday announced that it received Cypress onshore wind turbines supply contract from BIM Wind JSC. The contract is the company’s largest deal in southeast Asia for Cypress turbines. On the same day, GE Power Conversion received a modernization contract for Bochum hot rolling mill owned by thyssenkrupp Steel. In addition to the contracts, General Electric yesterday hinted that its cash generation in the second quarter of 2021 will be better than the year-ago quarter. It is worth noting here that the company’s shares gained 7.09% yesterday, ending the trading session at $14.35. GE Renewable Energy’s Contract Details
As noted, GE Renewable Energy will provide as well as work for the installing and the commissioning of its Cypress onshore wind turbines at South Central Vietnam-based 88 MW wind farm of BIM Wind. The turbines to be delivered will feature a two-piece blade design. In addition to the turbine-supply contract, GE Renewable Energy will provide operation and maintenance services for 15 years.
BIM Wind is a joint venture between BIM Energy Holding and AC Energy and Infrastructure Corporation. While BIM Energy is the renewable energy arm of Vietnam-based BIM Group, AC Energy is the power generation company of Philippine-based Ayala Corporation. The project is expected to be operational by the end of third-quarter 2021. Interestingly, GE Renewable Energy won a supply contract for its Cypress onshore wind turbines a couple of days as well. The deal required the company to deliver 16 units of its Cypress turbines to the Finland-based 88 MW Puskakorpi wind farm. Also, the company will provide services for 30 years. Renewable Energy provides offshore wind turbines, high-voltage equipment, blades for wind turbines (onshore and offshore), and other products and services. Its revenues in the first quarter of 2021 increased 1.7% year over year to $3,248 million. Organically, the segment’s sales were flat year over year, while orders increased 13%. Power Conversion and Cash Flow Details
GE Power Conversion’s contract involves the modernization of the Bochum hot rolling mill’s drive and automation system (related to side guides and downcoiler 3). The work will complete in three steps and is likely to be complete in the first quarter of 2022. Notably, the services provided by Power Conversion will help retain productivity at the mill as well as secure the availability of spare parts.
The cash flow expectation for the second quarter of 2021 was communicated by General Electric’s chief financial officer, Carolina Dybeck Happe, at Wolfe Research Transportation and Industrials Conference held yesterday. In addition to year-over-year expectation, cash flow improvement in the second quarter is expected to be somewhat similar to the first quarter. Notably, the company’s Industrial free cash flow was ($845) million in the first quarter of 2021, reflecting a 62% improvement from ($2,207) million in the year-ago quarter. Beside this, Industrial free cash flow in the second quarter of 2020 was ($2,067) million. Zacks Rank, Price Performance and Estimate Trend
General Electric currently has a market capitalization of $117.6 billion and a Zacks Rank #3 (Hold). Portfolio-restructuring measures, healthy liquidity position and solid contracts secured are expected to aid the company in the quarters ahead. Persistent challenges in Aviation are concerning.
In the past three months, General Electric’s share price has gained 13.1% as compared with 12.1% growth recorded by the industry.
The company’s earnings estimates are pegged at 26 cents for 2021 and 53 cents for 2022, reflecting improvements of 8.3% and 1.9% from the respective 60-day-ago figures. Also, earnings estimates are pegged at 4 cents for the second quarter of 2021, reflecting growth of 33.3% from the 60-day-ago figure.