General Electric posted a $9.8 billion net loss in the three months through December after a $3 billion charge from the Republican-led tax overhaul and billions more for insurance liabilities.
The Boston-based company's loss, which amounted to $1.13 a share, compared with a profit of $3.49 billion, or 39 cents a share, a year earlier.
While the tax bill will ultimately benefit the 126-year-old manufacturer founded by Thomas Edison, the insurance charge is just one more hit from a business GE entered in the 1980s and has been winding down for more than a decade. That's hindering new CEO John Flannery's efforts to turn around a company grappling with tough markets for some of its biggest manufacturing businesses.
Cash generated by industrial businesses, a key concern for investors focused on dividend payments and stock buybacks, was $7.8 billion, ahead of Flannery's revised projections but far short of an initial goal of as much as $14 billion when his predecessor was still in charge.
"Our responsibility is to reshape this company and ensure GE continues to matter in the next century as much as it did in the last one," Flannery said on a call with investors. "We have a lot to work on, but we have a lot to work with. The value of our core businesses remains intact."
Individual performance at GE's sprawling array of businesses was mixed, with growth in renewable energy, oil and gas equipment and medical devices overshadowed by a sharp decline in power, the largest.
Markets for that business, where revenue fell 15 percent to $9.4 billion at the end of the year as orders tumbled, will remain tough this year and may worsen, Chief Financial Officer Jamie Miller said on the call.
"This is an important franchise going through a difficult period," Flannery said.
Since succeeding Jeffrey Immelt in the top job in August, Flannery has shaken up GE's executive ranks while refocusing on core industrial businesses, which he identified as power, medical equipment, and jet engines.
Under pressure from activist Trian Partners to streamline the company founded by Thomas Edison, Flannery said at a November investment meeting that GE would exit the locomotives and industrial lighting markets and might shed its controlling stake in oil-business Baker Hughes. He also halved the quarterly dividend to 12 cents a share, saving about $4 billion.
The CEO said last week he expects to continue shrinking GE Capital, the once-sprawling lending arm that also houses the insurance business, which his predecessor began winding down in 2015.
Immelt had pulled out of the bulk of the insurance division about a decade before that, selling $130 billion in policies but retaining some units, such as reinsurer North American Life & Health, the operation responsible for the onerous charge. Reinsurers provide backup for so-called primary insurers, taking on some of the risks of massive payouts in catastrophe-level events.
Holders who bought policies decades ago, when they were younger and in better health, are now making higher-than-anticipated claims to cover expensive new treatments and for longer periods of time, since medical advances have prolonged life expectancy.
"The charges and scope of the problem are significantly worse than we had anticipated," Deutsche Bank analyst John Inch said in a note to clients last week.
General Electric has fallen 45 percent to $16.89 in the past 12 months, while the blue-chip Dow Jones industrial average, of which it's a member, has surged 32 percent.
Excluding the tax charge and the $6.2 billion insurance cost, the company reported adjusted profit of 27 cents a share, lagging behind the 29-cent average estimate from analysts surveyed by FactSet.