GE forecasts profit below analysts’ estimates

General Electric Co (GE) forecast profits for 2019 that were below analysts’ estimates, as the company spends to restructure its ailing power business.

Its shares dropped 2 per cent, ater earlier falling as much as 4 per cent following the release of the earnings outlook.

GE forecast adjusted earnings of 50 cents to 60 cents a share for 2019, below analyst expectations of 70 cents, on average.

The US industrial conglomerate said adjusted industrial free cash flow would be between negative $2 billion and zero. GE had warned investors last week about a net cash outflow from its industrial businesses.

The cash flow forecast takes into account more than $2 billion in charges for restructuring, corporate activity and “contingency” costs, the company said.

“GE’S challenges in 2019 are complex but clear,” Chief Executive Larry Culp said in a statement that reiterated his priorities of trimming GE’S debt and improving the performance of its industrial businesses, especially the ailing power-plant division.

The company expects adjusted industrial free cash flow to be positive in 2020, with the pace of improvement accelerating in 2021, but provided no target figures.

It expects free cash flow for its power business to remain negative in 2020 before turning positive in 2021. Investors are looking closely at GE’S cash and earnings ater the company lost nearly $23 billion last year.