Updated at 7:24 am EST
General Electric (GE) posted weaker-than-expected third quarter earnings Tuesday, while lowering its full year profit forecast, as supply chain disruptions and cost pressures continue to trim the industrial group’s bottom line.
The stock reversed earlier declines, however, as investors looked to solid overall sales and a reiteration of its forecast for $4.5 billion in full-year free cash flow.
General Electric said adjusted non-GAAP earnings for the three months ending in September were pegged at 35 cents per share, a figure that was38.6% lower than last year and 11 cents shy of the Street consensus forecast of 46 cents per share. Group revenues, General Electric said, rose 3.6% from last year to $19.1 billion, just ahead of analysts’ estimates of an $18.62 billion tally.
GE said it sees adjusted earnings in the region of $2.40 to $2.80 per share for the full year, down from earlier forecasts of between $2.80 and $3.50 per share.
“Our team is delivering, with strong Aerospace performance in the third quarter, fueled by the improving commercial backdrop and our progress managing operations and the supply chain environment,” said CEO Larry Culp. “We are building broad-based momentum with solid revenue and free cash flow results, as well as services growth in all businesses.”
“Our planned spin-offs remain on track with GE HealthCare ready to go in the first week of January,” he added. “With leading positions in growing, critical sectors, we are excited about our plans to launch three independent, investment-grade companies set up to create long-term shareholder value.”
General Electric shares were marked 2.9% higher in pre-market trading immediately following the earnings release to indicate an opening bell price of $75.50 each.
Last month, GE CFO Carolina Dybeck Happe said supply chain disruptions have extended into the back half of the year, affecting everything from labor to parts and materials, making it difficult to deliver products to customers. Some orders and now being pushed into the fourth quarter, Dybeck Happe said, putting pressure on current quarter cash flows.
Speaking at the Morgan Stanley Laguna conference Thursday, Dybeck Happe nonetheless said third quarter cash flows will likely be in-line, or slightly better, than the Q2 tally of $162 million, adding that the group expects solid organic growth in both its aerospace and healthcare divisions over the final three months of the year.
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