General Electric (NYSE:GE) announced an upward revision to its full-year earnings forecast on Tuesday after a recovery in its jet-engine business helped it report a higher-than-expected quarterly profit.
The industrial conglomerate, however, said it faced a "challenging" operating environment because of global supply chain disruptions and uncertainty over whether production tax credits for onshore wind investments will be extended over the long term in U.S. President Joe Biden’s infrastructure bill.
GE, like other manufacturers, is grappling with a labor crunch and shortages of raw materials such as semiconductor chips and resins. It expects the supply constraints to persist through the rest of the year and in 2022, hurting profit in its healthcare business.
The uncertainty over production tax credits is weighing on its onshore wind business. If the incentives are extended, GE is worried that customers may defer investments. As a result, it expects its renewable energy unit to burn cash this year.
The Boston-based company expects 2021 adjusted profit in the range of $1.80 to $2.10 per share, compared with $1.20 to $2.00 estimated previously.
GE said it expects revenue growth, margin expansion, and higher free cash flow next year. However, it narrowed free cash flow estimates for 2021 to $3.75 billion to $4.75 billion from the $3.5 billion to $5.0 billion earlier forecast.
GE shares zoomed $3.41, or 3.2%, to $108.75.