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GE CEO: This will still be a challenging year

Brian Sozzi
A picture shows helmets of US company General Electric at a factory of the group. (Photo credit: LOIC VENANCE/AFP/Getty Images)

About five months into 2019, General Electric (GE) CEO Larry Culp is staying on message.

It’s unclear though if beleaguered GE investors want to hear his message, however.

Culp reiterated at an investor conference on Thursday that 2019 would be a “reset year” for the industrial icon. It’s a phrase Culp uttered twice on the company’s first quarter earnings call in late April. Culp said he expects 2019 to be a “challenging” year for free cash flow. He added that second quarter free cash flow would also be “challenging.”

Culp said he isn’t “thrilled” about the free cash flow outlook.

Culp reiterated a free cash outflow of $1 billion to $2 billion in the second quarter.

GE shares weakened after Culp’s comments to $9.38 a share.

The comments are not too far off from ones Culp made a week or so ago another investor conference. Culp also continued to lay out the efforts by his team to reduce GE’s debt-laden balance sheet and improve the fundamentals of all its businesses (notably, the power division).

What GE is doing

For GE, the continued pressured free cash flow is a byproduct of ongoing struggles in most areas of its business — notably the key power business.

GE saw operating profit margins decline in two of its six business segments in the first quarter (aviation and power). The renewable energy business swung to a loss of $162 million versus a profit of $77 million a year ago.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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