American conglomerate General Electric reported disappointing quarterly results, which sent its share prices plummeting Tuesday. The decline in its quarterly revenue was attributed to the ongoing global supply chain disruptions.
For its fourth quarter last year, GE generated revenue of around $20.3 billion. This was a 3% decrease from its reported revenue over the same period a year ago. The figure was also below average analysts' estimates of $21.5 billion for the period.
GE's adjusted earnings for the quarter were $0.92 per share, slightly above analysts' expectations for $0.85 per share. GE's stock dropped by 8% during the opening trade following the release of its earnings report.
GE said it is still continuing to experience supply chain issues across all of its business units, particularly at its healthcare business. The company also blamed inflation, which has increased the cost of transportation and materials such as steel.
The company's chief executive, Larry Culp, told investors that they might need to raise prices in the coming months to offset the increased inflationary pressures that are affecting its ability to generate profits. Culp added that the company would also be implementing new strategies to cut down on overall costs. Culp told investors that he expects inflations to remain a difficult challenge for the company throughout the year.
As a result of supply chain constraints created by the COVID-19 pandemic, companies of all sizes are battling inflationary pressures, driving up costs for everything from labor, transportation, and raw materials.
Siemens Energy's stock has been falling since the German company's wind power branch, Siemens Gamesa, reduced its financial outlook for the third time in nine months. GE's rival said the reduced outlook was due to supply chain concerns and a rise in the cost of critical commodities.
GE's onshore wind business is also suffering from persistent doubts about whether production tax incentives for onshore wind investments in the U.S. will be extended.
GE said that it expects to return to revenue growth within the year, fueled primarily by its rapidly expanding aviation business. The company recently reported a more than 20% increase in revenue from the business, which manufactures jet engines for Boeing and Airbus.
In its forecast for this year, the company expects its adjusted profits to be within $2.80 per share to $3.50 per share. GE added that it expects higher profits and free cash flow this year. It said that it expects its full-year free cash flow to be between $5.5 billion and $6.5 billion.
