What explains GE's gross margin volatility since 2022?

General Electric's (GE) gross margin volatility since 2022 can be attributed to several key factors:

1. Segmental Performance: The company's gross margin fluctuations are influenced by the performance of its various segments, particularly Healthcare and Renewable Energy. For instance, the Healthcare segment faced challenges due to supply chain disruptions, which negatively impacted margins. On the other hand, the Aerospace segment has been a strong performer, with robust demand for its engines and related services, which has contributed to better margins.
2. Supply Chain Constraints: GE has been affected by supply chain challenges, which have disrupted product deliveries and impacted margins. For example, the LEAP engine program, crucial for the Aerospace segment, has faced delays due to supply chain disruptions. These constraints can lead to increased costs and reduced profitability.
3. Investment in Growth: The company's investment in growth opportunities, such as the RISE program, which emphasizes innovation through pioneering technologies, may temporarily strain margins as it incurs additional costs. However, these investments are crucial for long-term profitability and may lead to improved margins in the future.
4. Market Conditions: The Aerospace segment's performance is closely tied to commercial air travel, which has been impacted by the COVID-19 pandemic. The recovery in air travel demand has been a significant factor in the segment's recent performance. Changes in market conditions and customer behavior can thus influence GE's gross margins.
5. Corporate Costs: Variations in corporate costs, such as those related to selling, general, and administrative expenses, can also impact gross margins. For example, an increase in these costs can reduce net profit margins.

In summary, GE's gross margin volatility since 2022 is primarily driven by the performance of its segments, particularly Healthcare and Aerospace, supply chain constraints, investment in growth initiatives, market conditions, and corporate costs. These factors can either positively or negatively impact margins, leading to volatility in the company's financial performance.