WIND WOES: GE Cuts Targets as Wind Woes Push 2022 Goals Out of Reach

Oct 25, 2022

(Bloomberg) General Electric Co. cut its full-year profit target despite strong cash performance in the past quarter, as higher costs in the struggling wind operations add to ongoing challenges with supply chain and labor.Adjusted earnings per share will be $2.40 to $2.80, GE said Tuesday in a statement, after previously guiding to the low end of a range of $2.80 to $3.50. Analysts had estimated $2.67 on average.The guidance adjustment underscores the depth of the challenges facing the renewable energy business as Chief Executive Officer Larry Culp pushes to turn around the once-mighty manufacturer.Though never a cash cow, the company’s wind turbine unit has deteriorated over the last year alongside soaring inflation, supply chain snags and policy shifts in the US that have stunted near-term demand. Stabilizing that business will be critical for the planned combination and spin-off of GE’s wind turbine, power-equipment and grid businesses in 2024.

GE Renewable Energy saw operating losses balloon to $934 million in the third quarter as orders plummeted 43% and sales fell 15%.

The company said it would restructure its power-related businesses, focused on the renewable energy unit. The plan, which will generate an expense of about $600 million, should deliver about $500 million in annual savings, it said.

“Power remains on track to grow this year and we are taking significant actions to reset Renewable Energy,” Culp said in the statement.

ROO.AI Oil and Gas Field Service Software

Profit Miss

GE reported adjusted earnings per share of 35 cents in the period, compared to an average of 47 cents expected by analysts. Free cash flow — a closely watched measure of underlying earnings power — was $1.2 billion, far surpassing the $319 million expected by analysts.

GE shares were little changed as of 6:59 a.m. before regular trading in New York, paring an earlier decline. The stock had declined 22% this year through Monday’s close.

The company also said it now expects its adjusted organic profit margin this year to expand as little as 125 basis points. GE now forecasts free cash flow of about $4.5 billion.