General Electric Co. (GE.N) jumped after revealing that it burned less cash to start the year, boosting Chief Executive Officer Larry Culp’s effort to rejuvenate the ailing manufacturer amid a global slowdown in the power-equipment market.

GE’s industrial businesses went through US$1.22 billion in cash in the first quarter, the company said in a statement Tuesday as it reported earnings and reaffirmed its 2019 financial forecasts. That was better than Wall Street’s expectations for an outflow of US$2.9 billion, and an improvement over last year’s US$1.76 billion depletion.

“GE started its 2019 ‘reset year’ with nice momentum,” Deane Dray, an analyst at RBC Capital Markets, said in a note to clients. While GE warned that the cash performance may not be as strong later this year, investors were pleased to see the company tempering enthusiasm instead of “apologizing for a shortfall.”

The results provide the first glimpse of what is expected to be a rough year for cash generation after Culp warned last month that GE would burn as much as US$2 billion this year. The company anticipates a rebound next year for cash flow as Culp seeks to repair the balance sheet and regain investor confidence amid one of the worst slumps in the company’s 127-year history.

GE rose 7.4 per cent to US$10.45 at 9:39 a.m. after advancing as much as 7.8 per cent for the biggest intraday gain in two months. The shares climbed 34 per cent this year through Monday, topping the 21 per cent increase in a Standard & Poor’s index of industrial stocks.

The better-than-expected cash performance was driven largely by timing, as orders in the gas-power and other businesses came earlier than expected, Chief Financial Officer Jamie Miller said on a conference call with analysts. Industrial free cash flow is a closely watched metric that’s considered a gauge of earnings potential.

Miller and Culp warned that the relative strength will balance out over the course of the year, and there was no change to the 2019 expectations. The first quarter was tempered by a US$1.9 billion outflow related to working capital, which the company attributed to “inventory build” and other collection issues in the power and renewable-energy businesses.

GE also topped expectations for profit and sales in the quarter. Adjusted earnings of 14 cents a share compared with the 9-cent average of analyst estimates. Revenue fell 1.8 per cent to US$27.3 billion, ahead of expectations of US$27.1 billion.

“Our quarterly results were better than our expectations,” Culp said in the statement. “This is one quarter in what will be a multiyear transformation, and 2019 remains a reset year for us.”

‘New Risk’

The aviation unit, one of the bright spots for GE during a dismal past two years, again provided a boost, with a 12 per cent sales gain. But the division has its challenges. GE, which makes jet engines for the Boeing Co. 737 Max through a joint venture with Safran SA, called the uncertainty around the plane’s grounding a “new risk.”

Sales in the power-equipment unit continued to lag, falling 22 per cent as Boston-based GE navigates a multiyear decline in the market. The business, which makes and services gas turbines and other machinery, has been a significant drag on GE’s cash and earnings.

Culp, who assumed the top post in October, recently took one of his boldest steps yet to reshape the portfolio when he agreed in February to sell the biopharmaceutical division for US$21.4 billion and shelve plans for a spinoff of GE’s broader health-care unit. The move was part of a broader effort to narrow GE’s focus, strengthen its operations and improve the balance sheet.

The CEO is trying to reduce risk inside the company, highlighted by an agreement GE revealed during the quarter to pay US$1.5 billion to settle a Justice Department investigation of a defunct subprime-mortgage business in GE Capital.

The once-vast finance arm reduced assets by US$1.1 billion during the quarter and paid down US$2 billion of external debt, GE said.

GE reaffirmed its forecast for adjusted earnings of 50 cents to 60 cents a share this year. Free cash flow in the manufacturing businesses will be zero to minus US$2 billion in 2019. The results depend on several variables, GE said. They include the timing of asset sales and restructuring, as well as the outcome of the 737 Max grounding, which followed two deadly crashes in five months.