Before markets opened on Thursday, General Electric (NYSE:GE) withdrew its full-year 2020 guidance and warned that it expects earnings in its recently completed first quarter to be "materially below" the $0.10 per share target the company provided just one month ago.
In a statement, the company said that, given the evolving nature of the COVID-19 coronavirus pandemic, "GE cannot forecast with reasonable accuracy the full duration, magnitude, and pace of recovery across our end markets, operations, and supply chains."
GE said that, while earnings will be down in the quarter, it still expects industrial free cash flow to be near the prior guidance of a negative $2 billion. The company said that earnings "deteriorated to a greater extent" than industrial free cash flow in March, primarily due to non-cash charges and timing issues in its aviation, renewable energy, and capital units.
The aviation unit in particular has been hard hit by a dramatic slowdown in air travel due to the pandemic. On April 2, GE announced plans to furlough about half of the workers at its massive aircraft-engine manufacturing unit for up to four weeks, and in late March said it would cut its overall aviation workforce by about 10%.
General Electric is in the early stages of what figures to be a multi-year turnaround as it attempts to reverse years of declines due to market-topping acquisitions and taking on too much debt. The company has sold a number of assets to try to bring its debt under control, including the recent sale of its biopharma unit to Danaher.
In a statement Thursday, CEO Larry Culp said that despite setbacks due to the pandemic General Electric is still making progress getting its balance sheet under control.
"We are taking swift actions across the company to position GE to come out stronger on the other side of the COVID-19 crisis," Culp said. "With net proceeds of about $20 billion from the BioPharma transaction now in hand, we have more flexibility to de-risk and further strengthen our balance sheet. We are committed to bringing down our leverage over time as we navigate this period of uncertainty and position ourselves for the future."
GE expects to report first quarter results on April 29.