General Electric on Tuesday said it would miss its annual profits forecast and warned that the credit crisis would continue taking its toll on the company’s finance arm for at least another year. The US conglomerate warned analysts its Q4 results would be hit by a charge of up to $1.4bn for additional credit losses and restructuring at GE Capital, its finance unit. On top of the impact of financial markets turmoil, the new charge would reduce GE’s profits for the year to about $18bn, down from the $19.5bn-$21bn forecast in October and its 2007 net income of $22.2bn. News of the lower profits – the third time this year that GE has either missed or been forced to reduce earnings estimates – came as the company said it would continue to shrink GE Capital and cut costs across the group by $2bn next year. The moves underline the sharp reversal in the fortunes of GE Capital, which was a profit engine for the group in the 1980s and 1990s. Lex asks how GE Capital is financing itself even as it shrinks, and wonders about the composition of future earnings, among other questions.

This entry was posted by Gwen Robinson on Wednesday, December 3rd, 2008 at 5:41 and is filed under Capital markets. Tagged with ge. Edit this entry.