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GE targets stronger margins through cost control and backlog conversion as inflation and growth investments pressure profitability.
GE Aerospace GE recorded an operating profit of $2.75 billion (on a non-GAAP basis) in second-quarter 2026, an increase of 18% year over year. However, the company's operating profit margin (non-GAAP) was 21.7%, reflecting a decrease of 130 basis points (bps). The decline was attributable to the impacts of growth investments and cost inflation.In the second quarter, GE’s cost of sales (comprising costs of equipment and services sold) surged 26.7% year over year to $8.7 billion. While selling, general and administrative expenses increased 10.9% to $1.1 billion, research and development expenses rose 28.1% to $460 million. The company is incurring high costs and expenses related to certain projects and increased production activities.Nevertheless, GE Aerospace’s solid momentum across both commercial and defense aerospace sectors, driven by a strong pipeline of projects, is expected to drive its growth. Also, its focus on effective cost management and backlog conversion is expected to improve its margin performance. For 2026, the company expects to generate operating profit (non-GAAP) in the range of $10.55-$10.75 billion compared with the previous forecast of $9.85-$10.25 billion. The updated guidance indicates year-over-year growth of 17% at the mid-point. For the year, GE expects its top-line and margin performance to benefit from higher LEAP engine deliveries, strong demand for aftermarket services and focus on operational execution.
