General Electric (GE) shares moved lower Thursday after the industrial group reaffirmed its reduced profit forecasts ahead of an investor day presentation in Greenville, South Carolina as input costs and supply chain disruptions continue to test its ongoing turnaround under CEO Larry Culp.
Earlier this moth, GE said it expects supply chain and cost pressures to last into at least the second half of the year, noting that the "magnitude" of these challenges would pressure growth profit and free cash flow well into the second half of the year.
GE said Thursday that it still expects adjusted earnings were pegged in the region of $2.80 to $3.50 per share while generating free cash flow in the region of $5.5 billion to $6.5 billion, a figure that will improve to $7 billion in 2023.
Margins should expand by around 150 basis points, GE said, adding it sees 'mid-single-digit' growth for its aviation business.
“We’re running GE’s businesses better, creating value for shareholders today and tomorrow. Our talented, resilient team has embedded lean deeply across GE, and we have decentralized how we run the company," Culp said. "Our stronger balance sheet positions us to deploy capital to invest in growth.”
“Our teams are excited about the future as we lay the groundwork for our planned three independent companies focused on the critical global needs of precision health, the energy transition, and the future of flight," he added. "As strong, customer-centric businesses, each will benefit from greater accountability, team alignment, and capital allocation flexibility to enable a more sustainable, healthier, and connected future."
General Electric shares were marked 1.2% lower in early trading to change hands at $90.13 each, a move that would extend the stock's two-month decline to around 9.1%.
General Electric reported adjusted non-GAAP earnings for the three months ending in December were pegged at 92 cents per share, up 48% from the same period last year and 7 cents ahead of the Street consensus forecast.
Group revenues, General Electric said, fell 7.4% to $20.303 billion, coming in well shy of analysts' estimates of a $21.48 billion tally.
Our dramatic debt reduction means we can further intensify efforts to strengthen our operations and play offense, setting us up to deliver between $5.5 to $6.5 billion free cash flow in 2022 and more than $7 billion in 2023," Culp told investors in late January.
