General Electric (GE) shares tumbled after the company said it sees “significant known headwinds to 2019 cash flow” for its industrial division.
The announcement came in a prepared slideshow for JPMorgan’s Aviation, Transportation and Industrials Conference in New York Tuesday. According to the slide deck, these headwinds include impacts from “legacy projects and structure, reversal of PTC cycle” and “supply chain finance transition,” and that these effects will “meaningfully lessen” in 2020 and 2021.
GE CEO Larry Culp said during the conference presentation that he sees this year’s industrial free cash flow “in negative territory,” according to a Bloomberg report.
Shares of GE fell 6.45% to $9.71 each as of 1:29 p.m. ET. The stock was down as much as 7.7% at the lows of the session amid the announcement, marking the largest intraday drop since November.
The conglomerate last reported in its quarterly earnings results in late January that industrial free cash flow, a closely watched measure for the unit’s efficiency, totaled $4.5 billion in fiscal 2018.
The company noted in its slide deck that it is seeking to reduce leverage, improve its financial positioning and strengthen its businesses, “starting with Power.” Revenue in the GE Power unit, which comprised about 23.6% of total industrial segment revenues in 2018, declined 22% year-over-year for the 12 months ending in December. GE Power’s full-year loss totaled $808 million in 2018.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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