GE Expects Yet Another Negative Cash Flow Year But Calls 2019 a Reset Year

GE General Electric Company

On March 14, Thursday, General Electric CEO Larry Culp presented his long term assessment of the overall prospects of GE. He calls 2019 a reset year. GE’s stocks closed 3% higher that day.

GE Reset Year: Turning the Giant’s Fate Around in 2019

It has not been a good run for the company in the last half-decade. In 2017, GE announced a staggering 4.5 billion USD net loss while 2018 was hardly any better with a negative cash flow of 2.7 billion USD. GE pinned much of its downturn in an inability to prepare for a slow-down in turbine demand.

Culp expects 2019 to be a much tougher year for GE financially. The company plans to drastically reduce its power division costs, but this will not be a quick or easy process by any means. The CEO estimated they can reach that goal within 2 years. 2019, however, would be a reset year but not necessarily a profitable one yet.

GE’s Hopeful Longterm Forecast

The CEO candidly explained GE’s predicament. It simply had too much debt. Furthermore, catching up with a serious power turnaround mode would not be a fast fix. It will take more than a year before positive changes become apparent in GE’s financial statements. By the year 2020, GE expects to reduce its power costs by 20 percent which will bring up the year’s organic revenues and margin’s.

Culp added that GE is “game on” this year to start the long haul of fixing its cash flow. GE is expecting free cash flow to turn positive by 2020 and cash flow to turn positive by 2021.

Investors Still Showing Positive Outlook about GE’s Reset Year

Shareholders may still be feeling cautious about General Electric, but the increase in share price reflects a positive general outlook among investors regarding the reset year. Larry, himself, feels enthusiastic about the team’s dedication to GE’s vision and the progress they are making in reviving the renowned company’s fiscal health.

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