GE Profit Forecast for 2023 Weighted by Renewable Energy Industry
The General Electric Co. logo can be seen. on the company’s corporate headquarters building in Boston, Massachusetts, USA July 23, 2019
Alwyn Scott Reuters
General Electric It reported better-than-expected quarterly earnings on Tuesday on strong demand for its jet engines and power equipment, but gave a disappointing profit forecast for this year as it struggles with ongoing problems at its renewable energy business.
The company’s shares were down about 1% at $78.98 in premarket trading.
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GE expects adjusted full-year earnings in the range of $1.60 to $2.00 per share this year, up from a profit of 77 cents a share in 2022. The forecast compares with analysts’ average forecast of $2.36 per share, according to Refinitiv.
The Boston-based company also expects to generate higher free cash flow this year as its aircraft business is expected to benefit from strong demand for engines and aftermarket services.
However, it expected an operating loss of between $200 million and $600 million for its GE Vernova energy business in 2023.
The company’s renewable energy business has faced challenges due to inflation and pressure on the supply chain. The unit reported a loss of $2.2 billion in 2022.
It is reducing the number of people worldwide at the onshore wind unit by 20% as part of a plan to restructure and resize the business.
In an interview, CEO Larry Culp said onshore business is expected to increase after the tax credit for wind projects is restored.
“We think we’ll see a step up not just in 2023, but in (20)24 and beyond,” Culp told Reuters.
Culp said high inflation is also a challenge for the offshore wind industry as it forces buyers to review the economics of their projects.
GE, which spun off its healthcare unit earlier this month, plans to spin off its energy businesses, including renewables, into a separate company next year.
Culp said the company is still struggling with inflation and supply chain pressures. He expects inflation to be a “test” for the company even as it adjusts its prices to offset higher costs.
While there hasn’t been a significant improvement in supply chain problems, Culp said the company has gotten better at getting around them. For example, GE has sent hundreds of its employees to the sites of its aircraft suppliers to reduce some of the bottlenecks.
GE’s adjusted profit for the fourth quarter came in at $1.24 per share, beating analysts’ average estimate of $1.13 per share.