By Jeb Blount / Reuters
RIO DE JANEIRO: General Electric Co expects its sales growth in resource-rich countries in Latin America and the Middle East to outpace that in China and Asia, which has been a major focus for the largest US conglomerate.
The world’s biggest maker of jet engines and electric turbines has stepped up its focus on fast-growing countries outside the United States and Western Europe.
“We think that within the next 10 years, the growth markets will contribute 50 percent of the company’s revenue,” up from about 37 percent currently, said John Rice, a GE vice chairman who runs the company’s foreign operations, at an investor briefing in Rio de Janeiro on Wednesday.
Rice also confirmed GE’s target for overall corporate profit to rise at a double-digit percentage rate this year.
The company forecast 20 percent to 25 percent sales growth in what it calls the “resource-rich” regions of Latin America, Australia, the Middle East and Africa, outpacing forecast 10 percent to 15 percent growth in Asia.
The “resource-rich” countries, which produce large amounts of oil, natural gas, metals or other commodities, are a major focus for GE since they need its electric turbines, oil production gear and other heavy equipment.
In Latin America, for instance, GE sees a chance to sell $1 billion of equipment into Peru’s Kuntur pipeline project and $5 billion in equipment into regional biofuel projects, executives said.
Chief Executive Jeff Immelt has refocused the sprawling conglomerate over the past two years to tie it more closely to the energy industry, at the same time reining in its vast financial operations and selling a majority stake in the NBC Universal media business.
The company touches virtually all aspects of the global energy industry, making equipment used in oil and gas production, turbines to turn gas and coal into electricity as well as renewable energy gear including solar panels and wind turbines.
China’s slowdown has become a concern for GE and its major industrial peers, including Caterpillar Inc and 3M Co. On Monday, Beijing cut its gross domestic product growth forecast to 7.5 percent from the 8 percent target rate it predicted for the past eight years.
Rice argued GE’s big energy and healthcare equipment will remain a significant priority for emerging markets, even if their economies slow.
“As GDP rates get revised, there is still tremendous pressure on governments and companies to build out the infrastructure and we believe that’s the last thing that will get cut,” said Rice, who last year relocated to Hong Kong as part of GE’s drive to move top managers closest to its biggest markets.
About 56 percent of GE’s 301,000 employees work outside the United States, according to filings with the US Securities and Exchange Commission. The company generated 53 percent of its $147.3 billion in 2011 sales outside the United States.
GE competes with some of the world’s largest businesses, including Germany’s Siemens AG, French industrial group Alstom SA and Swiss engineering company ABB Ltd.
GE experienced its fastest growth in the Americas excluding the United States last year, with sales up 12.8 percent; with sales in the Pacific Basin region up 11.5 percent and in the Middle East and Africa up 8.9 percent.
That partly offset a 7.1 percent decline in the United States — which resulted from the sale of the NBC Universal media business — and a 6.1 percent drop in Europe.