General Electric Co. Chief Executive Larry Culp on Wednesday said supply-chain bottlenecks have made delivering products to customers the "number one" challenge for the company.
All the company's businesses are grappling with a "host of challenges" in satisfying customer demand, he said.
"Fortunately for us, it is not demand," Culp said at the Bernstein Conference. "We've got plenty of demand."
In April, the Boston-based industrial conglomerate said it was trending toward the lower end of its full-year earnings forecast, citing worsening supply chain and inflationary pressures.
To mitigate the impact, the company has raised prices and is invoking price escalation clauses in its service contracts. It is also trying to find alternative sources for parts and improve productivity to reduce cost.
Culp said the measures are intended to reduce overall costs by $2 billion this year.
Companies of all sizes are scrambling to produce enough to meet current demand and to restock inventory as the coronavirus pandemic snarled global supply chains and drove up costs for everything from labor to raw materials.
Culp said a number of GE facilities, including in the United States, were forced to operate below full capacity in the past three months as many workers dealt with COVID-related quarantine. GE's suppliers have been facing similar issues, he said.
While GE expects improvement across its businesses in the second half of the year, persistent supply chain and inflationary concerns have taken a toll on its stock.
GE shares have fallen about 30% since mid-November, when it unveiled a plan to split into three public companies. They were down 1% at $77.44 on Wednesday.
The company plans to spin off its healthcare business into a separate publicly-traded company next year. It would combine its power and renewable energy units, and spin off that operation in 2024.
There is no change in the timeline for the spin-offs, Culp said. (Reporting by Rajesh Kumar Singh Editing by Chizu Nomiyama and Bill Berkrot)
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