NEW YORK (AFP) — US industrial and financial giant General Electric, a bellwether for the US economy, slashed its earnings guidance Thursday and warned of difficult times ahead due to the global credit crunch.
The company, with interests spanning the world, said it had to cut its third-quarter and full-year earnings forecasts due to "unprecedented weakness and volatility in the financial services markets.
"Difficult conditions in the financial services markets are not likely to improve in the near future," it said, adding that it would also halt a share buy-back programme.
Ratings agencies Moody's and Standard and Poor's meanwhile confirmed their AAA top investment grade rating on GE, putting the outlook at 'Stable.'
Both agencies noted the measures the company was taking, while SP said GE Capital was still better placed than its rivals.
For the three months to September, the company said it now expected earnings per share 43 to 48 cents, down from its July forecast of 50 cents to 54 cents.
The full-year 2008 forecast was cut to a range of 1.95 to 2.10 dollars from the previous estimate of 2.20 to 2.30 dollars.
Chief Executive Jeff Immelt said these were "tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend."
Nearly half of the earnings of the Fairfield, Connecticut-based conglomerate, which produces jet engines, locomotives, water treatment plants and medical equipment, come from its finance arm, GE Capital.
The company is aiming to reduce that level, with the target of having the industrial businesses contribute 60 percent of profit by end 2009.
In pre-open trade, GE shares were down nearly 4.0 percent on the news.
In July, GE reported a six-percent drop in its second-quarter profit to 5.1 billion dollars while revenues rose 11 percent 46.9 billion dollars.
-Dow Jones Newswires contributed to this report
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