General Electric shares plunged Friday as the embattled company’s second-quarter profit dropped 30% and it cut its outlook for free cash flow by roughly $1 billion.
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The industrial giant said it expects free cash flow of about $6 billion in 2018, down from an earlier projection of between $6 billion and $7 billion. GE executives reaffirmed their expectation of full-year earnings per share of between $1 and $1.07, but the weak outlook raised doubts on Wall Street about the company’s ability to hit that target.
The company’s stock fell more than 5% in trading Friday on the weak quarterly results. Shares fell even as General Electric beat Wall Street’s expectations with quarterly revenue of $30.1 billion and adjusted earnings of 19 cents per share.
With profits sagging in recent years, GE has pursued an aggressive restructuring plan under CEO John Flannery. The company is selling off $20 billion in assets in a bid to cut costs and focus on its key businesses.
Flannery said the company has completed its review of its businesses, adding that the planned selloff of struggling assets is “substantially complete.”
“The market is challenging but we need to work through that,” Flannery said. “It is going to be a multiyear fix with some volatility.”
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GE’s power division was a source of particular weakness, with revenue in the sector plunging 19%, year over year, to $7.6 billion. The decline offset stronger results from the aviation and healthcare divisions.
GE exited the Dow Jones Industrial Average for the first time in more than a century last month. The company also slashed its dividend last November and is rumored to be considering another cut.
