General Electric says it could burn up to $2 billion of cash this year

  • General Electric on Thursday gave its 2019 outlook.
  • Chairman and CEO Larry Culp said the company could burn up to $2 billion of cash this year, but that it'll have a positive free cash flow in 2020 and 2021.
  • General Electric has been speeding up efforts to reduce debt and raise cash by selling assets.
  • Watch General Electric trade live.

General Electric released its 2019 outlook on Thursday morning, and indicated that it still has a difficult road ahead. 

"GE's challenges in 2019 are complex but clear," GE chairman and CEO Larry Culp said in the press release. "We are facing them head on as we execute on our strategic priorities to improve our financial position and strengthen our businesses."

The company laid out the following expectations for 2019:

  • GE Industrial segment organic revenues will grow in the low- to mid-single-digit range.
  • Adjusted GE Industrial margin will be in a range from flat to 100 basis points.
  • Adjusted GE Industrial free cash flow of -$2 billion to flat. 
  • Adjusted earnings per share of $0.50 to $0.60.

Culp said the company expects to reach a positive free cash flow in 2020 and 2021 "as headwinds diminish and our operational improvements yield financial results." 

Thursday's announcement comes just over a week after JPMorgan analyst Stephen Tusa said he thinks GE's turnaround will "stretch into 2021," adding that his $6 price target "looks generous."

GE shares lost more than half of their value last year as its power business struggled, price-cost pressures were compounded by the US-China trade war, and its LEAP engine suffered through behind-schedule deliveries.

The company announced a massive restructuring in June, saying it would reduce its debt by $25 billion. In October, GE replaced CEO John Flannery with Larry Culp. Under the leadership of Culp, GE has been speeding up efforts to reduce debt and raise cash by selling assets.

In November, GE announced it would expedite efforts to sell a $4 billion stake in the oil-field-services provider Baker Hughes. Additionally, its finance arm, GE Capital, sold a $1.5 billion healthcare-equipment finance portfolio to the US lender TIAA Bank.

And in December, General Electric said its digital unit would sell a majority stake in ServiceMax, a software provider, to the technology-focused private-equity firm Silver Lake.

Entering January, GE announced that it had revised the merger agreement between the rail-transport company Wabtec and its business unit GE Transportation. Under the new agreement, GE will receive $2.9 billion of cash but give more equity to Wabtec.

Separately, GE Capital sold off $8 billion of assets in the fourth quarter and brought its debt load down by $21 billion, according to the company's earnings release.

General Electric was down 1% early Thursday. It was up 37% so far this year.

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