GE upbeat over 2021 outlook after free cash flow beats estimates

Chicago — General Electric posted better-than-expected quarterly free cash flow on Tuesday and set an annual target for the key performance measure at $2.5bn-$4.5bn, due to better operational management and improvement in its power and renewable energy businesses.

The company — which has operations in aviation, health care, power, renewable energy, digital industry, additive manufacturing and venture capital and finance — had previously predicted a cash flow of at least $2.5bn  in the fourth quarter and a return to positive cash flow for 2021.

Investors had expected about $2.6bn in fourth-quarter cash flow and $3bn in 2021, according to Refinitiv data.

Free cash flow is closely watched by investors as a sign of the health of a company’s operations and ability to pay down debt.

GE, which is still recovering from the economic fallout of the coronavirus pandemic, expects an improvement in its industrial business this year, forecasting a low-single-digit growth in revenues.

Industrial revenues declined 13% in 2020. Adjusted earnings in 2021 is forecast to come in $0.15-$0.25 a share compared with $0.01 last year.

GE said it cut costs by more than $2bn and took other steps to save $3bn in cash last year in response to the pandemic.

Profit at GE’s power unit rose 3% in the quarter, compared with last year.

Adjusted profit for the fourth quarter ended December 31 came in at 8c a share, compared with Refinitiv’s average analyst estimate of a profit of 9c a share.

Reuters