General Electric CEO Larry Culp said at a J.P. Morgan conference on Tuesday that the company’s industrial free cash flow “in 2019 will be negative.”
GE shares fells as much as 7 percent in midday trading after Culp’s comment. The CEO was speaking with J.P. Morgan analyst Stephen Tusa at the firm’s aviation, transportation and industrials conference in New York City.
Free cash flow is a financial term defined as money left over after a company pays for operating expenses and capital spending and is often used as a gauge of efficiency. GE’s industrial free cash flow is a key measure watched by investors.
GE generated $4.5 billion in industrial free cash flow last year. Culp is working on turning around GE’s fortunes as he focuses on improving the company’s cash generation, as well as cutting costs.
Tusa is widely followed on Wall Street for his work covering GE. Ahead of his meeting with Culp, the J.P. Morgan analyst warned investors that GE’s prized aviation financing and leasing business is “already in liquidation mode” and has weakening earnings that are “masked by gains.”
Culp also said that GE’s battered power business will continue to face challenges for “a couple of years” more.
“We know power is in a turnaround mode and that’s not going to be a quick turnaround by any stretch,” Culp said. “It’s going to be a few years before we can call the end of that.”
This story is developing. Please check back for updates.