General Electric is expanding its business portfolio, spinning off GE HealthCare in early January. Its energy arm, GE Vernova, is slated to become a separate company by next year. File Photo by Urs Flueeler/EPA-EFE
Jan. 24 (UPI) — With a diverse set of offshoots, General Electric said Tuesday it was anticipating strong cash flow for 2023, but its renewable energy business proved to be a governor on broad-based momentum.
GE is expanding its business portfolio, spinning off GE HealthCare in early January. Its energy arm, GE Vernova, is slated to become a separate company by next year. The industrial giant announced plans in 2021 to break in three — one company each to focus entirely on aviation, healthcare and energy.
The name General Electric will continue with the third company, focused on aviation and “shaping the future of flight.”
In total, the company reported fourth-quarter revenue of $21.8 billion, a 7% improvement over the previous term. Adjusted net earnings should work out to be around $2 per share this year, an improvement over 77 cents from 2022.
But the company is facing headwinds even after announcing plans to restructure as three separate entities. GE Aerospace can expect an improvement in revenue, free cash flow and as much as $5.7 billion in operating profit.
But Vernova, its renewable energy arm, is expecting a profit loss as steep as $600 million. Lower performance for onshore wind is expected to continue this year, with a reduction in headcounts possible.
That trend follows heavy layoffs in the tech sector. Microsoft, Hootsuite and Spotify are all planning layoffs this year, trimming staff as the global economy slows.
Still, GM remains upbeat about its future.
Apart from its aviation division, GM CEO H. Lawrence Culp said he’s expecting a rebound in renewables due to incentives offered from the U.S. government. “External catalysts” such as the Inflation Reduction Act are expected to help.
“As a result, we expect high single-digit revenue growth and strong free cash flow generation in 2023 for GE,” he said.
U.S. President Joe Biden’s signature IRA offers incentives for companies working in renewable energy, provided companies have a U.S.-based manufacturing sector.