GE lifts 2021 earnings forecast, flags ‘challenging’ operating environment

1 min


170
109 shares, 170 points

The General Electric logo is pictured on working helmets during a visit at the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe/File Photo

CHICAGO, Oct 26 (Reuters) – General Electric Co (GE.N) raised its full-year earnings forecast on Tuesday after a recovery in its jet-engine business helped it report higher-than-expected quarterly profit.

The industrial conglomerate, however, said it faced a “challenging” operating environment because of global supply chain disruptions and uncertainty over whether production tax credits for onshore wind investments will be extended over the long term in U.S. President Joe Biden’s infrastructure bill.

GE, like other manufacturers, is grappling with a labor crunch and shortages of raw materials such as semiconductor chips and resins. It expects the supply constraints to persist through the rest of the year and in 2022, hurting profit in its healthcare business.

“I’m not sure we’re yet at a place where we would say that things are stable,” Chief Executive Larry Culp told investors on an earnings call. “It really is akin to playing a whack-a-mole.”

The company expects inflationary pressure to intensify next year, adversely impacting its onshore wind business due to the rising cost of transportation and commodities like steel.

To mitigate that impact, it is trying to improve productivity, source alternative parts and redesign product configurations.

The uncertainty over production tax credits, meanwhile, is weighing on its onshore wind business. If the incentives are extended, customers may defer investments, and as a result, GE expects its renewable energy unit to burn cash this year.

The Boston-based company expects 2021 adjusted profit in the range of $1.80 to $2.10 per share, compared with $1.20 to $2.00 estimated previously.

GE said it expects revenue growth, margin expansion, and higher free cash flow next year. However, it narrowed free cash flow estimates for 2021 to $3.75 billion-$4.75 billion from $3.5 billion-$5.0 billion forecast earlier.

Shares were up 0.7% at $106.01 in morning trading.

Adjusted profit for the third quarter was 57 cents a share. Analysts on average expected 43 cents per share, according to Refinitiv data.

It generated $1.7 billion in free cash flow from industrial operations during the quarter, compared with $514 million a year ago.

Reporting by Rajesh Kumar Singh
Editing by Kirsten Donovan and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

Source: Reuters


Like it? Share with your friends!

170
109 shares, 170 points

What's Your Reaction?

Cute Cute
13
Cute
Fun Fun
5
Fun
Hate Hate
26
Hate
Confused Confused
16
Confused
Fail Fail
8
Fail
Geeky Geeky
2
Geeky
Love Love
21
Love
OMG OMG
16
OMG
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format