GE To Report Q4 Earnings: Will Power Segment Issues Hurt?
Zacks Investment Research | Jan 29, 2019 07:51AM ET
General Electric Company (NYSE:GE) is scheduled to report fourth-quarter 2018 results on Jan 31, 2019, before the market opens.
The Power segment — engaged in the production of gas, steam and aero derivative turbines; generators; and combined cycle systems — accounted for 20.1% of Industrial revenues in the third quarter. Apart from the Power segment, the Industrial segment results include that of six other segments.
Once a major growth driver, the Power segment is currently grappling with difficult macroeconomic conditions.
Segment’s Q4 Performance, Estimates
In the third quarter of 2018, the Power segment’s revenues declined 33% year over year to $5,739 million. Orders were weak, down 18%, and backlog fell 5.8% to $93.7 billion. Also, its profit margin dipped by 16.4 percentage points. This segment’s dismal performance has been one of the prime reasons for General Electric’s poor third-quarter results.
It is worth mentioning here that the Power segment’s third-quarter revenues lagged the Zacks Consensus Estimate of $5,969 million by 3.86%. Its average sales surprise for the last four quarters was a positive 4.89%.
General Electric predicts that difficulties related to project execution, operational issues and lower market penetration will pose threat to the Power segment’s performance in the quarters ahead. In addition, geopolitical tensions, growing popularity of renewable energy sources, macroeconomic challenges and overcapacity in the industry are other prevailing headwinds.
For the fourth quarter of 2018, the Zacks Consensus Estimate for revenues for the Power segment is pegged at $6,711 million, below $9,421 million generated in the year-ago quarter. Conversely, the segment is predicted to report operating loss of $345 million compared with operating earnings of $260 million recorded in the year-ago quarter.
Overall Q4 Expectations
The Zacks Consensus Estimate for revenues of the Industrial segment in the to-be-reported quarter is currently pegged at $30,987 million, reflecting decline of 3.8% from the previous year’s figure of $32,214 million. Profit for the Industrial segment is likely to decrease 10.9% year over year to $3,156 million. (Read more: Zacks Investment Research
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