General Electric Co. stood by its goal of boosting cash flow this year despite a near-term drag from the production halt of Boeing Co.’s 737 Max.
While the company’s cash burn could worsen to as much as US$2 billion in the first quarter because of “pressure” from the Max crisis, GE will reap the rewards of a rebound later in the year, Chief Executive Officer Larry Culp said Wednesday at a Barclays conference. GE’s manufacturing businesses will generate as much as US$4 billion in free cash this year, he reiterated.
Culp’s sanguine outlook for 2020 offered a measure of relief to investors concerned over the Max’s impact on GE, which makes engines for Boeing’s best-selling jet. The plane has been grounded for almost a year following a pair of deadly crashes.
GE expects to set aside about US$100 million in the first quarter related to its old long-term care insurance business, a smaller amount than expected, Culp said. Separately, he cautioned that the virus outbreak in China is a “wild card” for the near-term performance of the Boston-based company, which also makes power equipment and medical scanners.
GE rose 1.2 per cent to US$12.90 at 10:32 a.m. in New York. The stock climbed 14 per cent this year though Tuesday, compared with a 3.1-per-cent advance for a Standard & Poor’s index of U.S. industrial companies. GE jumped 53 per cent last year, a partial recovery after a share collapse the previous two years.
Advertisement