GE cuts full-year earnings guidance due to issues in its renewable energy business

Oct 25 (Reuters) – General Electric Co (GE.N) slashed its full-year earnings guidance on Tuesday after reporting a fall in third-quarter earnings, mainly due to higher guarantees and related reserves at its business with renewable energies.

But the company’s free cash flow for the quarter ended September was $1.19 billion, much higher than its previous estimate. Quarterly earnings also beat Wall Street estimates.

GE’s shares are up about 5% in premarket trading.

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The Boston-based industrial conglomerate now expects adjusted earnings in 2022 to be in the range of $2.40 to $2.80 per share, compared to $2.80 to $3.50 previously estimated.

The company reported adjusted earnings of 35 cents per share, down from earnings of 53 cents per share last year.

Excluding a $500 million guarantee and associated reserves in the renewable energy business, quarterly earnings would have been 75 cents a share.

The company, which is in the process of breaking up into three companies, faces challenges in the onshore wind business. The unit, which is the largest of GE’s renewable businesses, is grappling with higher raw material costs due to inflation and supply chain pressures.

In the United States, GE’s most profitable onshore wind market, political uncertainty after renewable generation tax credits expired last year hurt customer demand and contributed to a 15% decline in renewable energy revenue from the prior September quarter .

GE expects about $2 billion in losses from renewable energy sources this year. The company is laying off employees at its onshore wind farm as part of a plan to restructure and resize the company. Continue reading

The restructuring of its renewable energy business is expected to yield annual savings of $500 million, the company said.

GE reiterated that demand at its aviation unit is expected to remain strong, leading to revenue growth of more than 20%. The company said its aviation business has made progress in addressing supply chain issues, which has led to a double-digit increase in jet engine deliveries since the second quarter.

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Reporting by Rajesh Kumar Singh and Abhijith Ganapavaram in Bengaluru; Edited by Saumyadeb Chakrabarty, Sriraj Kalluvila and Chizu Nomiyama

Our standards: The Thomson Reuters Trust Principles.

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