GE shares fall as first-quarter outlook disappoints

General Electric's adjusted profit for the December quarter came in at $1.03 per share,

General Electric Co shares fell on Tuesday after the company flagged a lower-than-expected profit in the current quarter after fourth-quarter earnings topped forecasts on strong demand for parts and services at its jet engine business.

The Boston, Massachusetts-based company expects an adjusted profit of 60-65 cents a share in the quarter through March compared with 72 cents a share expected by analysts in a LSEG survey.

General Electric's shares were down about 4% in pre-market trade.

Ticker Security Last Change Change %
GE GE AEROSPACE 148.06 -4.88 -3.19%

GE's aviation business has been riding a surge in demand for aftermarket services as a strong rebound in travel and a shortage of new jets prompt airlines to keep their planes in the air for longer periods.

The company said the aerospace business, which makes engines for jets of Boeing and Airbus, is expected to report $6 billion to $6.5 billion in adjusted operating profit in 2024 and more than $5 billion in free cash flow.

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The grounding of Boeing's 737 MAX 9 airplanes for safety checks after a cabin panel fell off during an Alaska Airlines flight this month as well as a snag with rival RTX's Pratt & Whitney Geared Turbofan (GTF) engines are expected to keep the demand high for aftermarket services.

Ticker Security Last Change Change %
BA THE BOEING CO. 169.82 -0.41 -0.24%

"The recent Alaska Airlines accident makes the commercial aerospace aftermarket once again the safest portion of the sector into earnings, with demand robust and pricing power firmly intact," J.P. Morgan analyst Seth Seifman wrote in a note last week.

Ticker Security Last Change Change %
ALK ALASKA AIR GROUP INC. 45.01 +0.57 +1.28%

CFM International, GE's joint venture with France's Safran SA, is an engine supplier for Boeing's 737 MAX jetliners and competes with RTX's Pratt & Whitney to power Airbus' 320neo jets.

GE, which has completed the separation of its health care business, said on Tuesday it would spin off its energy businesses, including renewables, into a separate company in early April.

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As a result, it provided separate full-year estimates for its energy businesses including renewables and aerospace unit.

GE said its portfolio of energy businesses, known as GE Vernova, is estimated to generate revenue of $34 billion to $35 billion and free cash flow of $700 million-$1.1 billion in 2024.

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GE's adjusted profit for the December quarter came in at $1.03 per share, higher than 91 cents a share expected by analysts. Total revenue rose 15% to $19.42 billion.