GE's First-Quarter Projection Falls Short, Leading to Share Decline

General Electric Co has indicated a lower-than-expected profit for the current quarter, attributing it to the slow progress in its renewable business, despite surpassing fourth-quarter earnings forecasts fueled by demand for jet engine parts and services.

Pre-market trade witnessed a 2% decline in the company's shares following the announcement.

The Boston-based company foresees a gradual improvement in profit for its renewable business in the second half of the year, but the first quarter's performance is anticipated to mirror that of the fourth quarter.

GE Vernova, the renewable business unit within the company's energy portfolio, has incurred losses for the past two years, although its fourth-quarter losses narrowed compared to the previous year.

GE's Chief Financial Officer, Rahul Ghai, explained during an earnings call that there is a lag between order and revenue conversion, contributing to the back-end loading of improvements in the renewables sector.

The company anticipates an adjusted profit of 60-65 cents per share in the quarter through March, falling short of the 72 cents per share expected by analysts in an LSEG survey.

GE's aviation business, experiencing heightened demand for aftermarket services due to increased travel and a shortage of new jets, particularly benefits from the robust performance of its jet engine business.

The aerospace business, responsible for manufacturing engines for Boeing and Airbus jets, is expected to report $6.0 billion to $6.5 billion in adjusted operating profit in 2024 and over $5 billion in free cash flow.

Ongoing issues such as the grounding of Boeing's 737 MAX 9 airplanes for safety checks and challenges with RTX's Pratt & Whitney Geared Turbofan (GTF) engines are projected to maintain high demand for aftermarket services.

J.P. Morgan analyst Seth Seifman noted that despite recent challenges, the commercial aerospace aftermarket remains the safest segment of the sector into earnings, with robust demand and resilient pricing power.