General Electric Co (NYSE:GE) has indicated lower-than-expected profit for the current quarter, attributing the subdued performance to the slow progress in its renewable business. While the fourth-quarter earnings surpassed forecasts due to increased demand for parts and services in its jet engine business, GE’s shares experienced a 1% decline in morning trade.
The Boston-based company anticipates a gradual improvement in profitability for its renewable business in the second half of the year, but the performance in the first quarter is expected to resemble that of the fourth quarter. The renewable business, part of GE Vernova, a portfolio of energy businesses, has reported losses in the past two years, although fourth-quarter losses narrowed from the previous year.
GE’s Chief Financial Officer, Rahul Ghai, explained to analysts that there is a lag between order placement and revenue conversion, and the improvement in renewables will be more pronounced in the latter part of the year.
For the first quarter through March, GE expects an adjusted profit of 60 to 65 cents per share, falling short of the 72 cents per share expected by analysts in an LSEG survey.
In contrast, GE’s aviation business has experienced increased demand for aftermarket services, benefiting from a rebound in travel and a shortage of new jets that prompts airlines to keep their existing planes operational for longer. The aerospace business, responsible for producing engines for Boeing (NYSE:BA) and Airbus jets, is projected to report adjusted operating profit between $6.0 billion and $6.5 billion in 2024, with free cash flow exceeding $5 billion.
Recent events, such as the grounding of Boeing’s 737 MAX 9 airplanes for safety checks after an incident during an Alaska Airlines (NYSE:ALK) flight, and issues with RTX’s (NYSE:RTX) Pratt & Whitney Geared Turbofan (GTF) engines, are expected to sustain high demand for aftermarket services in the commercial aerospace sector.
GE announced plans to spin off GE Vernova into a separate company in early April, following the completion of the separation of its healthcare business. The company provided separate full-year estimates for its energy businesses and aerospace unit.
For GE Vernova in 2024, revenue is expected to range between $34 billion and $35 billion, with free cash flow projected at $700 million to $1.1 billion.
Despite the disappointing first-quarter outlook, GE reported an adjusted profit of $1.03 per share for the December quarter, surpassing the 91 cents per share expected by analysts. Total revenue increased by 15% to $19.42 billion.
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Author Faith Yakubu 
