GE cuts annual forecast, posts 19% drop in adjusted profit

GENERAL Electric (GE) reported a 19 per cent drop in adjusted quarterly profit and cut its annual earnings forecast on Tuesday (Oct 25), as it struggles with supply snarls, inflationary pressures and weakness in its renewable energy business.

The US industrial conglomerate cut its full-year adjusted profit forecast to US$2.40 to US$2.80 per share, compared with an earlier expectation of US$2.80 to US$3.50, primarily driven by warranty costs and reserves at its renewable unit.

Shares of GE fell 7.3 per cent before the bell.

The company, which is in the process of breaking up into three companies, said adjusted profit fell to US$1.06 billion for the quarter through September from US$1.32 billion, a year earlier.

GE, like other US manufacturing majors, has been hit by raw material shortages and rising freight costs across its operations, though price hikes and cost controls have helped offset some of that pain.

Last month, chief financial officer Carolina Dybeck Happe said the company was still grappling with supply-chain bottlenecks, which have made it tougher to deliver products to customers on time.

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It has also been struggling with poor results in its renewable energy business due to policy uncertainty following the expiry of renewable electricity production tax credits last year, which has hit customer demand.

Reuters reported earlier this month that GE is laying off workers at its renewable business’ onshore wind unit.

Free cash flow, a closely watched metric, fell about 11 per cent to US$1.19 billion in the third quarter. REUTERS