In what is likely the fist major under the radar profit warning of the current quarter, GE chief, and Obama Job Tzar, Jeff Immelt warned during GE’s annual outlook meeting held earlier in Manhattan that the “economic uncertainty” in the current quarter has resulted in an investment “pause” that has resulted in a slowdown of corporate sales. Put into numbers, GE is now calling for about 8% growth this year, from a 10% forecast barely two months ago. Read: Q4 sales, and thus earnings, are set to be a major disappointment. And while no superstorms were blamed in this particular sales warning, the fiscal cliff did feature prominently. As the WSJ reports, “[Immelt] said ongoing jitters over the so-called “fiscal cliff” of tax increases and government spending cuts contributed to the trend.” Then again, it is just as likely that the tapped out US consumer, whose savings rate is tumbling, whose real disposable income is now declining on a year over year basis, and whose real wage growth is decidedly negative, would be tapped out even if Obama and Boehner were not playing constant cat and mouse. But whatever the reason for the slowdown may be, one thing is certain: “Clearly, there has been an investment pause in certain industries,” Mr. Immelt said. “We’ve definitely seen a slowdown in the fourth quarter.” Bring on the spin brigade.
From the WSJ:
GE is planning for industrial organic revenue growth—which excludes the impact of acquisitions—of 2% to 6% in 2013.
Mr. Immelt was upbeat overall, saying GE is on track for solid earnings growth, and he also stood by previous targets for expansions in industrial profit margins this year and next. He noted the company has a sizable cash position and is growing in key markets.
Mr. Immelt said the U.S. conglomerate aims for a long-term earnings contribution from GE Capital of around 30% as it continues its efforts to shrink the finance unit. GE Capital contributed about 32% of GE’s earnings in 2011, and about 35% through the first nine months of 2012.
“Our strategy really hasn’t changed,” said Mr. Immelt as he opened the annual investor meeting.
Mr. Immelt said Monday that order flow from China was improving, while Europe and the health-care sector remained headwinds.
More can be found in the complete GE investor presentation attached below, which summarizes the key tailwinds and headwinds as follows:
Full presentation below (link):