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GE warns Outlook is under pressure from supply chain downtime

General Electric Co. warned that its operations would be pressurized by supply chain disruptions this year, citing strong quarterly growth for its jet engine unit as commercial air traffic recovers from a pandemic-driven downturn.

The Boston heterogeneous business group said Tuesday that its year-on-year results were well on track to reach the low end of its January forecast. The manufacturer continues to face pressures from supply chain disruptions and rising costs of raw materials and cargo, as well as the effects of the Russian invasion of Ukraine.

“As we continue to work through inflation and other evolving pressures, we are currently moving towards the lower end of the spectrum,” said CEO Larry Culp.

For 2022, GE GE 0.91%

had forecast high single-digit revenue growth, earnings of $ 2.80 to $ 3.50 per share and free cash flows of $ 5.5 to $ 6.5 billion

GE shares fell 4% in Tuesday morning trading.

GE, which has weakened and streamlined its operations under Mr. Culp, plans to split into three separate public companies in the next two years with the healthcare department expected to be disconnected in early 2023.

The results of the first quarter showed how the various parts of the heterogeneous business group are doing in the current climate, with the recovery of air travel strengthening one unit and reducing the demand for renewable energy sources enticing another.

Revenue from the aviation division, which builds and serves jet engines, rose 12 percent to $ 5.6 billion in the first quarter, while the division’s profits rose to $ 908 million. GE said it expects demand in the segment to remain strong. It faces uncertainty in China since the recent outage of Covid-19 and the supply chain shutdown, but forecasts revenue growth of at least 20% for the year.

Revenue for CT, MRI and other hospital equipment saw revenue rise 1 percent to $ 4.4 billion, but profits fell 23 percent to $ 538 million as supply chain shortages continued. to affect the business.

Revenue from the electricity sector, which builds and operates turbines for gas-fired power plants, fell 11 percent to $ 3.5 billion in the first quarter.

The wind turbine division, which builds wind turbines, saw sales fall 12 percent and operating loss of $ 434 million. GE said its U.S. onshore wind farm was hit by uncertainty about tax cuts and deferred customer investment, and the entire sector was hit by rising material and logistics prices.

Every day, millions of seafarers, truck drivers, coasters, warehouse workers and deliverers hold mountains of goods moving to shops and homes to meet growing consumer expectations for comfort. But this complex movement of goods underpinning the global economy is far more vulnerable than many imagined. Photo illustration: Adele Morgan

I write to you Thomas Gryta at thomas.gryta@wsj.com

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GE warns Outlook is under pressure from supply chain downtime

Source link GE warns Outlook is under pressure from supply chain downtime

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