GE anticipates renewable energy rebound after disappointing year

General Electric Co. executives anticipate a rebound in the company's renewable energy business in 2023 following a disappointing year marked by macroeconomic headwinds.

While GE reported net earnings of $2.13 billion in its fourth-quarter 2022 results, the conglomerate's renewables unit continued to struggle, posting a loss of $454 million. For full year 2022, the segment lost $2.24 billion.

The company announced that it would lay off 20% of its workers in onshore wind, while inflation ate into profits from sales of its Haliade-X offshore wind turbine, one of its signature products.

"[We're] going to need to recognize the losses that go with the Haliade-X early on here," Larry Culp, GE chairman and CEO, said during a Jan. 24 earnings call.

Executives pointed to inflation and the temporary lapse of the U.S. production tax credit to explain the woes in the renewables segment. But they are aiming for profitability when GE spins off its power business into GE Vernova in 2024.

Culp said there are already signs of a turnaround in the market: GE reported fourth-quarter 2022 orders of $5 billion for equipment such as wind turbines. That is up 4% compared to the same period in 2021.

The CEO projected that 2023 revenues made on the Haliade-X turbine would more than double from $500 million in 2022. GE also expects orders for onshore wind turbines to increase over 50% in North America and looks to deliver more than 2,000 units globally.

Looking ahead, sales will be driven by expanded tax credits under the U.S. Inflation Reduction Act, Culp said.

"In fact, we began to see a rebound in demand this quarter with renewable orders up 7%," Culp said. "Onshore orders in North America more than doubled, a very encouraging sign. But unlocking the full potential of the [Inflation Reduction Act] will hinge on how quickly the administration moves through implementation."

GE's fourth-quarter 2022 net earnings of $2.13 billion compared favorably to its loss of $3.90 billion in the year-ago period. Its adjusted EPS came in at $1.24, beating the S&P Capital IQ normalized EPS consensus estimate of $1.16.