GE shares drop after giving 2019 forecast lower than Wall Street estimates

Sebastien Bozon | AFP | Getty Images

An employee of General Electric works on a gas turbine at the GE plant in Belfort, France.

General Electric told shareholders on Thursday that the embattled conglomerate expects 2019 earnings to be below what analysts anticipated as it continues to be plagued by problems in its power business.

GE expects 2019 adjusted earnings between 50 cents and 60 cents a share, below the 70 cents a share Wall Street expected according to Refintiv.

This was the first outlook from GE Chairman and CEO Larry Culp, who was appointed in October.

“We have work to do in 2019, but we expect 2020 and 2021 performance to be significantly better,” Culp said in a statement.

GE shares fell more than 4 percent in premarket trading from Wednesday’s close of $10.02 a share.

With the company’s power business expected to continue to struggle, Culp is working on turning around GE’s fortunes. He remains focused on improving the company’s cash generation, as well as cutting costs.

Additionally, GE confirmed what Culp told investors on Mar. 3: GE’s industrial free cash flow “in 2019 will be negative,” with the key metric expected between flat and negative $2 billion. Free cash flow is a financial term defined as money left over after a company pays for operating expenses and capital spending and is often used as a gauge of efficiency. GE’s industrial free cash flow is a key measure watched by investors.

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