GE shares tumble due to supply chain constraints and inflation, lowers earnings estimates
• GE shares slumped over 11% after it estimated to hit lower end of full-year earnings forecast
• Boston-giant is on track to implement its historic plans to split into three separate publicly traded companies
General Electric Co (NYSE: GE) reported better-than-expected first-quarter earnings, but forecasted less profit in the future. While retaining the outlook issued in January, the industrial conglomerate said it would hit the lower end of its full-year earnings forecast.
“As you’ve been hearing from many other companies, we’re operating in a challenging macro environment,” Chief Executive Larry Culp told investors on an earnings call, as fresh COVID-19-related lockdowns in China and the Russia-Ukraine crisis have worsened supply chain disruptions and exerted inflationary pressure.
In January, the Boston-based industrial giant projected full-year adjusted profit to be in the range of $2.80 to $3.50 per share and forecasted to generate $5.5 billion to $6.5 billion in free cash flow.
Shares of General Electric dropped over 11.5% in the New York trading session.
GE reported a higher-than-expected adjusted profit of 24 cents a share in the fiscal quarter ended in March, beating the Wall Street consensus forecast of 19 cents per share.
Although the macro-economic setbacks and other supply-chain issues had adversely impacted its revenue in the quarter by about 6 percentage points, the company reported a revenue of $17.04 billion, topping analysts’ estimates of $16.89 billion.
The company burned through $880 million in cash in the first quarter.
“This quarter, the GE team improved services, orders, and cash while scaling lean in all businesses to drive margin expansion,” Culp said.
“Our continuous operational improvements set us up to reinvest in innovation across GE, and our businesses remain focused on growth, supported by continued recovery at Aviation and strong demand at Healthcare.”
The giant also mentioned that it’s on track to split the 130-year-old industrial group into three separate ‘investment grade’ corporations — energy, healthcare, and aviation — by 2023, a plan that was unveiled last year.
Picture Credit: Fortune
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