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UPDATE 4-GE profit rises, cash outflow slows, shares jump 10 pct

Alwyn Scott and Rachit Vats

(Adds detail, analyst comments)

April 30 (Reuters) - General Electric Co said on Tuesday it generated more profit and lost less cash than expected in the first quarter, suggesting an improving outlook under its new leader and sending its shares up more than 10 percent in premarket trading.

Profit from continuing operations more than tripled as sales rose in GE's aviation, oil and gas, and healthcare units. Negative cash flow from GE's industrial business was $1.2 billion, much better than the $2.16-billion outflow that analysts, on average, were expecting.

GE's industrial free cash flow showed a "much smaller outflow than we expected," said Julian Mitchell, an analyst at Barclays, and "should drive a positive reaction in the stock."

GE took a string of multibillion-dollar writedowns last year, so the slowing in cash outflows in the latest quarter could be a sign that its fortunes have started to improve.

Investors have been keen for a turnaround since GE named new Chief Executive Officer Larry Culp last October to restore earnings and improve a stock price that has fallen by more than two-thirds since 2016.

But while the Boston-based conglomerate stuck to its full-year financial forecast, it said Boeing Co's 737 MAX jet presented a "new risk" for GE, which makes engines for the plane with partner Safran SA of France. Boeing's newest jetliner was grounded worldwide last month after a second fatal accident in less than five months.

Profit margins also contracted at GE's aviation, power and renewable energy businesses, the three core units that GE plans to retain as it undergoes a break-up announced last year.

And GE's cash balance was boosted mainly the $2.9-billion sale of locomotive business to Wabtec Corp. Its adjusted free cash flow from industrial businesses was "better than planned," GE said, helped mainly by the timing of payments. GE did not provide further detail.

Culp had set low earnings targets in March and warned that GE's industrial cash flow could be negative by as much as $2 billion.

Culp had said this "reset" would result in negative cash flow at its ailing power business through 2020 before turning positive in 2021. GE wrote down $22 billion in goodwill at the unit last year.

In the latest quarter, power orders fell 14 percent and profit fell 71 percent to $80 million on revenue of $5.7 billion, down about 22 percent from a year earlier, GE said.

Earnings from continuing operations attributable to GE shareholders rose to $954 million in the first quarter ended March 31 from $261 million a year earlier.

Earnings per share from continuing operations rose to 11 cents from 3 cents, the company said.

On an adjusted basis, GE earned 14 cents per share. Analysts had expected 9 cents per share, on average.

Total revenue fell 2 percent to $27.29 billion, above analysts' average estimate of $27.05 billion. (Reporting by Rachit Vats in Bengaluru and Alwyn Scott in New York; Editing by Bill Rigby and Nick Zieminski)