GE sticks to 2020 targets, but says coronavirus to hit cashflow by up to $500 million

General Electric on Wednesday reiterated its 2020 cash and profit targets but warned its first-quarter cash flow would take a hit of $300 million to $500 million due to the coronavirus outbreak.

Shares of GE, which employs thousands of workers in China and had been seen as heavily exposed to the economic weakness caused by the virus, were up 2% at $11.10 in premarket trading.

Chief Executive Officer Larry Culp, who is restructuring GE after a series of failures, in January forecast its first-quarter free cash flow at a negative $2 billion, largely due to the grounding of Boeing’s 737 Max for which it makes engines.

At that point the company said it would recover to generate between $2 billion to $4 billion in positive cashflow this year, and an adjusted profit of 50 cents to 60 cents per share. Analysts have estimated this year’s cashflow at a positive $2.77 billion.

The U.S. industrial conglomerate also expects a hit of $200 million to $300 million to its first-quarter operating profit from the virus, which has crushed economic activity in China and disrupted global supply chains.

“It’s a very conservative outlook and accommodates a lot of headwinds… basically it sails through everything,” William Blair analyst Nicholas Heymann said.

The U.S. Federal Reserve on Tuesday delivered a surprise early half-point cut in interest rates in a bid to shield the world’s largest economy from the impact of the coronavirus.

GE shares have lost about 16% since the company’s fourth-quarter earnings report in January.