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General Electric Stock Slides On Supply Chain, Labor Cost Hit to 2022 Profit Outlook

GE said Friday that the "magnitude" of supply chain and cost challenges could pressure its near-term profit forecasts.

Updated at 12:01 pm EST

General Electric  (GE) - Get Free Report shares extended declines Friday after the industrial group said it expects supply chain and cost pressures to last into at least the second half of the year.

GE said that while the pressures were included in the group's overall profit guidance, published late last month, "the magnitude of these challenges likely present pressure to overall growth, profit and free cash flow through the first quarter and the first half, beyond typically expected seasonality. "

GE had forecast on January 25 that it sees free cash flow in the region of $5.5 billion to $6.5 billion -- up from $2.6 billion in 2021 -- a figure that will improve to $7 billion in 2023. Adjusted earnings were pegged in the region of $2.80 to $3.50 per share - well shy of the Street consensus forecast of $4.00 per share, although that figure is based on an outdated reporting format.

"While we are seeing progress on our strategic priorities, we continue to see supply chain pressure across most of our businesses as material and labor availability and inflation are affecting Healthcare, Renewable Energy and Aviation," GE said in a Securities and Exchange Commission filing. "Although varied by business, we expect these challenges to persist at least through the first half of the year."

General Electric shares were marked 5.8% lower in late-morning trading to change hands at $92.82 each.

General Electric reported adjusted non-GAAP earnings for the three months ending in December were pegged at 92 cents per share, up 48% from the same period last year and 7 cents ahead of the Street consensus forecast. 

Group revenues, General Electric said, fell 7.4% to $20.303 billion, coming in well shy of analysts' estimates of a $21.48 billion tally.

Our dramatic debt reduction means we can further intensify efforts to strengthen our operations and play offense, setting us up to deliver between $5.5 to $6.5 billion free cash flow in 2022 and more than $7 billion in 2023," CEO Larry Culp told investors in late January.