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Stocksak: GE CEO sees a ‘choppier operating environment’ next year

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© Stocksak. FILEPHOTO: The General Electric logo is seen at its Baden plant, Switzerland, November 15, 2017. REUTERS/Arnd Wiegmann

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By Rajesh Kumar Singh

CHICAGO (Stocksak). General Electric (NYSE:) Co’s Chief Executive Larry Culp said Tuesday that companies will likely face a “choppier” operating environment next year. But he expressed confidence in his company’s ability to get through it.

Stocksak was told by Culp that they feel good about their ability to control the controllable. “But it’s likely that it will be a more difficult climate next year for everyone than it was here in (20-222).

The International Monetary Fund has reduced its 2023 global growth forecasts by a further 5%. It warned that rising inflation, war-driven energy, and food crises, as well as sharply higher interest rates, were threatening financial market stability and pushing the world to the edge of recession.

Culp however stated that GE will face operating challenges if it has a rapid increase in the aerospace sector following a strong recovery of air travel.

GE’s aerospace business (which makes and services jet engines) reported a 24% increase in revenue year-over-year and a 52% jump on profit in the September quarter.

The Boston-based company is optimistic about its long-term growth prospects for its aviation business. There are no signs of a slowdown in demand for air travel.

However, GE and its suppliers have faced capacity constraints due to shortages in labor, parts, and raw materials. This has made it more difficult for its aviation and healthcare businesses to keep up to demand.

Culp stated that although supply-chain pressures have gotten less severe, they still affect the company. Culp stated that the company has excess inventory and orders parts and raw materials in an effort to reduce the problem.

Culp stated, “We are carrying inventory but incurring excess cost due to these supply-chain problems,” adding that excess inventory is “very real,” and that near-term challenges are “very real.”

Culp stated that GE has placed 200 engineers at aerospace manufacturing plants to quickly perform “the root cause analysis” and implement countermeasures at the company and its suppliers. He said that it is also helping suppliers to reduce their dependence on labor.

These efforts resulted into a double-digits rise in jet engine deliveries from the second quarter.

Culp stated, “We just have more work to do in the coming years.”

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