Downbeat General Electric profit forecast, but shares rise

By | 03/15/2019

  • Earnings guidance missed forecasts
  • Shares 2.84% higher
  • Performance in 2020 and 2021 expected to improve

New 2019 earnings guidance issued by General Electric on Thursday missed forecasts from analysts, but shares were marked 2.84% higher following the release.

The latest stock movement extended the year-to-date gain to value the company at an estimated $90 billion.

General Electric also confirmed that it will use up to $2bn cash in its industrial division as part of a “reset”. Consequently, the first quarter of this year will be the weakest for the company, CEO Larry Culp warned.

“GE’s challenges in 2019 are complex but clear. We are facing them head-on as we execute on our strategic priorities to improve our financial position and strengthen our businesses,” Culp said.

He added that GE expected performance in 2020 and 2021 to be significantly better, with financial results benefiting from operational improvements. Culp also said that actions would be taken to reduce downside risk and create long-term value for shareholders.

GE’s CEO previously vowed that this year would be one of change for the group, which has been struggling recently. A renewed focus on developing the company’s critical power business and finding debt reductions via asset sales and spin-offs would be part of the plan.

Earlier this year, Culp explained: “Simply put, we have too much debt and we need to reduce it thoughtfully and soon.”

The company’s dividend was cut back to one penny last year after a mix of profit warnings and asset write-downs that hurt investor confidence. 

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