GE stock drops over extended trading as CFO gives caution on the situation during an investor conference.
In extended trading on Thursday, General Electric (NYSE:GE) lost 4.6% after CFO Carolina Dybeck Happe stated that continued supply-chain problems are putting pressure on the company’s cash flow, as reported on Bloomberg.
Chief Financial Officer Carolina Dybeck Happe attributed GE’s inability to supply goods like aircraft engines to ongoing difficulties procuring parts from suppliers. She stated Thursday at a Morgan Stanley conference that these roadblocks are delaying planned shipments and “having a detrimental impact on profit.”
The strain on the supply chain is also having an impact on GE’s free cash flow, which is a key metric for investors. According to her, the firm now anticipates that its free cash flow will be comparable to or “slightly” higher than the roughly $162 million it generated in the second quarter.
As of 9:48 a.m. in New York, shares of GE had fallen as low as 5.4% before recovering to trade down 4.8% to $65.61, which was a greater decline than the 1.6% drop in the S&P 500 Index as a whole. By the end of normal trading on Thursday, the stock had lost 27% of its value this year.
Commercial aerospace manufacturers are under scrutiny as they struggle with labor shortages and supply-chain constraints that have slowed the production of new engines and aircraft. The jet-engine segment of GE is by far its greatest revenue generator.
Boeing Co.’s efforts to increase production of its cash cow 737 Max are being hampered by late delivery of jet engines built entirely by GE and French partner Safran SA, according to Brian West, the planemaker’s CFO, who spoke at the Morgan Stanley conference on Thursday. According to West, senior management at Boeing and the Safran and GE engine manufacturing joint venture are attempting to clear up the bottlenecks.
GE stock and performance outlook
According to GE, the healthcare division’s spinoff would be completed in the first week of 2023. The corporation anticipates keeping a 19.9% stake in GE Healthcare, which has recently prospered due to the high demand for medical supplies and services.
According to West, senior management at Boeing and the Safran and GE engine manufacturing joint venture are attempting to clear up the bottlenecks. General Electric (NYSE:GE) has decreased by 28% this year, compared to the S&P 500 Stock Index’s decline of 19%. (SP500).
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