Yesterday, General Electric (NYSE:GE) CFO Carolina Dybeck Happe issued comments and projections that might be considered warnings for current and prospective investors. First of all, Happe noted the magnitude of General Electric’s supply chain issues. Furthermore, she cautioned that the industrial conglomerate’s cash flow “is expected to be under pressure,” as Reuters reported. GE stock declined 5% early today as traders considered the CFO’s commentary.
Supply chain bottlenecks can have a negative impact on customer satisfaction — there’s no denying it. In the case of General Electric, Happe observed supply chain woes have made it more difficult for the company to deliver its products to the customers on time.
The CFO made this and other observations at a Morgan Stanley conference yesterday. The data supports her points, as supply chain and macroeconomic issues deducted 5% from General Electric’s second-quarter revenue.
It’s possible supply chain disruptions are taking a toll on General Electric’s cash flows, as well. Reportedly, the company slashed its 2022 free cash flow forecast by $1 billion. With that, General Electric brought the projected range down to between $4.5 billion and $5.5 billion.
What’s Happening with GE Stock?
Happe issued her comments late yesterday. So, there’s been a delayed reaction as GE stock traders push the share price down today.
After trading above $100 briefly in January, General Electric shares skidded into the $60s not long ago. Today’s 5% share-price haircut certainly isn’t helping the bulls at all.
The news hasn’t been all negative, though. Happe assured that General Electric’s current-quarter cash flows will probably be either in-line with expectations, or even slightly better, compared to the second quarter’s $162 million.
So now, the shareholders will just have to wait and see how the third-quarter numbers pan out. Supply chain problems have hit the aerospace-manufacturing industry hard. Hopefully, General Electric can overcome these disruptions and deliver solid cash flow results for the current and future quarters.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
