MW GE Vernova now sees tariff costs of up to $400 million but keeps outlook intact

By James Rogers

'We are not immune to the complexity of play given the current outline of tariffs and resulting inflation,' GE Vernova CEO Scott Strazik says

Shares of GE Vernova Inc. charged higher Wednesday after the power and renewable-energy company said it is holding firm with its full-year financial outlook, even though it now expects to be hit with tariff costs of up to $400 million.

Also helping fuel the rally in the stock, the company reported a first-quarter profit that is more than double what was expected, amid strength in its electrification and gas power businesses.

The stock $(GEV.AU)$ shot up 7.1% in morning trading toward a two-month high. That puts it on track for its best one-day post-earnings performance since the company was separated from General Electric in early 2024.

"While our end markets remain strong, we are not immune to the complexity of play given the current outline of tariffs and resulting inflation," said Chief Executive Scott Strazik, according to a FactSet transcript of a conference call to discuss the company's results. "We do expect our costs to go up $300 million to $400 million in 2025."

The cost estimate includes actions the company is taking to mitigate the impact, including raising prices, cutting costs and the use of "existing contractual provisions."

The company had previously not provided an estimate on tariff impacts. But even with the added projected cost, the Cambridge, Mass.-based company maintained its guidance for 2025, which included expectations for revenue of $36 billion to $37 billion and for free cash flow of $2 billion to $2.5 billion.

Energy stocks, including GE Vernova, have taken a hit from President Donald Trump's tariff agenda. After reaching a record close of $437.71 on Jan. 23, less than a week after Trump's inauguration, the stock tumbled 38% to close April 4 at $271.48. But since then, the stock has bounced 29%.

For the first quarter to March 31, the company said it swung to net income of $264 million, or 91 cents a share, from a loss of $106 million, or 47 cents a share, in the prior year's quarter.

Analysts surveyed by FactSet, on average, were looking for earnings of 45 cents a share. That margin of the bottom-line beat was the widest since the company started reporting results as a standalone company.

Revenue was $8.03 billion, up from $7.26 billion, and above the FactSet consensus estimate of $7.55 billion. That was also the biggest top-line beat the company has had.

Among business segments, GE Vernova said electrification continues to be the fastest-growing business. While first-quarter orders fell 5% to $3.39 billion, revenue jumped 13.8% to $1.88 billion.

"Put simply, the world is entering an era of accelerated electrification driven by manufacturing growth, industrial electrification, EVs and emerging data-center needs, which is driving an unprecedented need for investment in reliable baseload power, grid infrastructure and decarbonization solutions," Strazik said.

Meanwhile, for GE Vernova's largest business, power orders grew 24% to $6.25 billion and revenue rose 10% to $4.42 billion, led by strength in demand for gas power equipment.

For the company's wind business, revenue grew 13% to $1.85 billion, but orders dropped 44% to $640 million.

Trump has made no secret of his disdain for wind power and paused federal permits for wind projects and leasing in one of his first executive orders.

Speaking during the conference call, Chief Financial Officer Ken Parks said that the order decline was driven by lower orders for onshore wind equipment as a result of "ongoing U.S. policy uncertainty and permitting delays."

Parks said that GE Vernova remains cautious on the timing of an onshore order inflection in North America, "as customers continue to navigate growing interconnection cues, policy uncertainty and higher interest rates."

However, the company expects that the wind segment will grow revenue in the high-single-digit percentage range in the second quarter, driven by higher onshore equipment deliveries, he added.

GE Vernova shares has gained 6.2% in 2025, compared with the S&P 500 index's SPX decline of 7%. However, the stock has soared 136.3% over the past 12 months, outpacing the S&P 500 index's gain of 7.8%.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 23, 2025 10:59 ET (14:59 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.