GE CEO sees ‘strong’ revenue growth despite challenges

A painted logo sits over the entrance to a General Electric Co. facility in Medford, Massachusetts July 17, 2009. REUTERS/Brian Snyder/File Photo

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CHICAGO, Feb 23 (Reuters) – General Electric Co expects to have “strong” revenue growth this year despite inflationary and supply-chain challenges, Chief Executive Larry Culp said on Wednesday.

The comments came days after the industrial conglomerate warned that supply and labor shortages, along with inflation, would pressure its profits through the first half of the year. read more

Culp said while the company was adjusting its prices, it would not be able to fully offset higher costs with price increases.

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“This is a tough operating environment,” hesaid at the Citi Industrial conference.

GE’s shares were down 1.4% at $92.78 in morning trading.

Last week, the Boston-based company said it was grappling with supply-chain issues across most of its businesses. Raw material and labor shortages, along with soaring costs, were adversely affecting its healthcare, renewable energy and aviation units, it said.

Persistent supply-chain bottlenecks also led to a decline in GE’s revenue in the quarter through December.

Culp said the logjam was making it tougher to keep up with demand in healthcare business.

“We clearly have another six months here, at least, where we have to fight tooth and nail to get products to customers,” he said.

To mitigate the impact, the company is scouting for new suppliers, sourcing alternative parts and redesigning product configurations.

Culp expects supplies to remain tight for a while. However, he said the price hikes and moves to improve supplies would start showing results in the second half of the year.

GE has forecast a return to revenue growth this year. It also expects to grow its profit margin by 150 basis points and to generate $5.5 billion to $6.5 billion in free cash flow.

Culp backed those estimates, saying the forecast had factored in supply-chain and inflationary challenges.

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Reporting by Rajesh Kumar Singh; editing by Jonathan Oatis and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

source: reuters.com