CEO Culp Hopes To Improve GE’s Financial Performance In 2019
General Electric has informed shareholders that its 2019 earnings will be much below expectation, but steps to improve performance will be taken.
The new CEO Larry Culp has taken charge from the month of October. He has assured shareholders of better performance in the years to come in 2020 and 2021. “We need to work in 2019”, he says for a better performance from the company. His first outlook is to bring the adjusted earnings higher by the end of the year.
The power business has been facing problems for quite some time. GE expects its earnings to fall within the range of 50 cents to 60 cents per share. However, Wall Street expectations are 70 cents per share.
GE has confirmed that its industrial free cash flow for the current year 2019 will remain negative, but will turn positive in 2020.
The company is burdened with heavy debt. CEO Culp says his next target is to meet breakeven within a short span. He intends to reduce the heavy debt that burdens the company and bring in better performance in the underperforming sectors.
The CFO Jamie Miller says that GE capital requires another $4billion in cash to bring up performance in 2019.
Though GE has cut almost 10,000 workers from its workforce, the company is expected to lay off more of its headcount. Currently, it has brought down its staff by 36 percent.
The company has had a credit downgrade by Moody Investor Service, Fitch Ratings and S&P Global Ratings. The company has to step up its debt reduction to get better ratings. Positive words from the CEO have brought relief to shareholders and investors who are worried about the performance of the industrial giant.
Bringing up the company to the level of peers is one of the targets of the company says, CEO Culp. This will also improve investor sentiment feels the CEO.