General Electric (GE) posted stronger-than-expected fourth quarter earnings Tuesday, but fell short of revenue forecasts and issued a weak 2022 profit outlook, sending shares in the industrial group lower in pre-market trading.
General Electric said adjusted non-GAAP earnings for the three months ending in December were pegged at 92 cents per share, up 48% from the same period last year and 7 cents ahead of the Street consensus forecast. Group revenues, General Electric said, fell 7.4% to $20.303 billion, coming in well shy of analysts' estimates of a $21.48 billion tally.
Looking into the coming financial year, GE said it sees free cash flow in the region of $5.5 billion to $6.5 billion -- up from $2.6 billion in 2021 -- a figure that will improve to $7 billion in 2023. Adjusted earnings were pegged in the region of $2.80 to $3.50 per share - well shy of the Street consensus forecast of $4.00 per share, although that figure is based on an outdated reporting format.
Industrial free cash flow for the quarter, a key GE profit metric, topped Street forecasts by $700 million at $3.8 billion.
“2021 was an important year for the GE team, marked by significant strategic, operational, and financial progress," said CEO Larry Culp. "We delivered solid margin, EPS, and free cash flow performance in 2021, exceeding our outlook. Orders for the year were up double digits, supporting faster growth going forward, while supply chain challenges, commercial selectivity, and uncertainty surrounding the U.S. wind production tax credit impacted our top-line."
“We're seeing real momentum and opportunities for sustainable profitable growth from near-term improvements in GE's businesses, especially as Aviation recovers and our end markets strengthen. Our dramatic debt reduction means we can further intensify efforts to strengthen our operations and play offense, setting us up to deliver between $5.5 to $6.5 billion free cash flow in 2022 and more than $7 billion in 2023."
General Electric shares were marked 6.75% lower in early Tuesday trading following the earnings release to change hands at $90.38 each.
GE's 2022 outlook is based on a new 'single line' reporting format, which will no longer include GE Capital as a stand-alone division.
General Electric unveiled plans in early November to split into three separate companies, marking one of the most significant changes in the industrial giant's 130-year history.
General Electric will form three different companies -- focusing on energy, healthcare and aviation -- with current CEO Larry Culp tabbed as non-executive chairman of the developing healthcare group -- which will be run by Peter Arduini -- when it is spun-off in 2023.
Tax-free spinoffs of the energy and power divisions will occur in 2024, as they're combined into a single group lead by Scott Strazik, General Electric said. The bulk of the existing company remaining in place -- with the GE name -- to focus on aviation and will be lead by John Slattery.
Collectively, the separations will cost around $2.5 billion, GE said, when taxes and operational expenses are ultimately tallied.
