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GE Power saw sales drop 12% in the third quarter of 2020, while revenues increased 3%, driven by improved cost productivity and cuts in fixed costs, the company reported in its quarterly financial results. Revenues for the quarter reached $4.025 billion, up from $3.926 billion for the same period in 2019. Profit was also up by $300,000.
Both gas-based electricity generation and GE gas turbine utilization has remained stable, the company said. GE’s ability to close transactions, particularly services parts & upgrades, has been impacted by constrained customer budgets and access to financing due to oil prices and economic slowdown, especially in Gas Power. The company is catching up with suppliers on parts and projects that were delayed due to COVID-19 and expects to complete about 95% of all planned outages in the year.
“Although there may be market challenges in the near term, we believe gas will play a critical role in the energy transition and our view of the market has not materially changed, albeit timing on new orders is harder to forecast,” the company wrote in its quarterly report. “Power continues to right-size its business to better align with market demand and driving its businesses with an operational rigor and discipline that is focused on its customers’ lifecycle experience. In Gas Power, we continue to size the business for a 25-30 GW market, although acknowledge that the size any given year can vary. We remain focused on our underwriting discipline and risk management to ensure we are securing deals that meet our financial hurdles and we have a high confidence to deliver for our customers.”
GE Power said it anticipates the power market to continue to be impacted by overcapacity in the industry, increased price pressure from competition on servicing the installed base, and the uncertain timing of deal closures due to financing and the complexities of working in emerging markets. Market factors such as increasing energy efficiency and renewable energy penetration continue to impact long-term demand. The company had orders for 17 gas turbines in the quarter, making for 32 orders so far in 2020. That compares with 52 for the first three quarters of 2019.