Updated at 9:38 AM EST
General Electric (GE) – Get General Electric Company Report posted better-than-expected earnings in the first quarter on Tuesday, while confirming its full-year profit expectation and noting that its historic plans to split the group into three separate companies remain on track.
Equities were pressured in early trading, however, after CEO Larry Culp said supply chain demand and inflationary pressures were likely to continue into the current quarter, noting that the full-year earnings forecast is heading for the lower end of the January guidance.
General Electric said adjusted non-GAAP earnings for the three months ending March were pegged at 24 cents a share, a figure that was essentially flat compared to last year but ahead of Street- the consensus forecast of 19 cents per share. The group’s revenue, General Electric said, was also slightly changed from last year at $ 17 billion, but came in modestly higher than analysts’ estimates at a figure of $ 16.9 billion.
GE confirmed its 2022 forecasts, which they first released in January and repeated last month, saying they expect adjusted earnings in the range of $ 2.80 to $ 3.50 per share. region of $ 5.5 billion to $ 6.5 billion, a figure that will improve to $ 7 billion by 2023.
The supply chain and cost pressures are likely to last for at least the second half of the year, GE said in March, noting that the “size” of these challenges will also push growth in profit and free cash flow growth.
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“During this quarter, the GE team improved services, orders and cash while scaling lean in all companies to drive margin expansion,” Culp said. “Our continuous operational improvements prepare us to reinvest in innovation across GE, and our companies continue to focus on growth, supported by continued improvement at Aviation and strong demand at Healthcare.”
“We are keeping the outlook range we shared in January, but as we continue to work through inflation and other shifting pressures, we are currently heading towards the low end of the range,” he added. “Importantly, we remain on track to launch three independent, investment-quality companies with leading positions in growing, critical sectors, well positioned to create long-term value.”
GE shares were marked 8.1% lower at the beginning of Tuesday trading after the earnings announcement to change hands to $ 82.66 each, a move that would extend the stock’s year-to-date gain to around 14.3%.
The group also noted that it is about to split the iconic group into three separate ‘investment grade’ companies, a plan unveiled last year that marks one of the most significant changes in the industrial giant’s 130-year history.
General Electric will form three different companies – with a focus on energy, healthcare and aviation – with current CEO Larry Culp as non-executive chairman of the evolving healthcare group – which will be run by Peter Arduini – when spun – by 2023.