General Electric Co (NYSE: GE) reported better-than-expected free cash flow for Q4 on Tuesday. Shares still tanked nearly 10% as revenue came in shy of Street estimates.
Highlights from CEO Culp’s interview on ‘Squawk on the Street’
The earnings report comes shortly after General Electric said it planned on splitting into three separate, publicly-traded companies. On CNBC’s “Squawk on the Street”, CEO Larry Culp said:
The $87 billion debt reduction in three years carried an opportunity to simplify our financials. We switched from three-column reporting to one-column reporting today that’ll make GE’s performance and potential more accessible to investors. We’ve received strong feedback on our plans to split up. So, moving forward, we have a lot of conviction in what we’re doing here.
GE blamed supply constraints, inflationary pressures, regulatory uncertainty and commercial selectivity for a decline in revenue from three out of four of its businesses in Q4. It was the fourth straight quarter of lower-than-expected revenue for the conglomerate.
CEO Culp, however, confirmed that the company was committed to mitigating these headwinds, many of which are likely to clear in the back half of 2022.
Key takeaways in General Electric’s Q4 earnings report
General Electric said it lost $3.90 billion in the fourth quarter ($3.55 per share). In the comparable quarter of last year, it had posted $2.44 billion in net income ($2.20 per share), as per the earnings press release.
The American multinational generated $20.30 billion in revenue – 3.5% up from last year but below the FactSet consensus of $21.31 billion. Operating margin was up 200 basis points in Q4.
Also in the fourth quarter, AerCap completed the acquisition of GE’s Capital Aviation Services business. Free cash flow stood at $3.71 billion versus the year-ago figure of $4.39 billion but ahead of $3.06 billion consensus. FCF for 2021 as a whole printed at $5.8 billion,
Earlier this month, Credit Suisse upgraded General Electric to “outperform” with a price target of $122 that represents a 35% upside from here.
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