NEW YORK (Reuters) - General Electric Co (GE.N) expects developing markets to be a “huge engine” of growth due to demand for the company’s products that provide infrastructure in these countries, GE’s top international executive said on Wednesday.
GE, which is increasingly focused on industrial products such as jet engines, power turbines and oil and gas equipment, should see double-digit percentage increases in orders in developing countries for the “foreseeable future,” said John Rice, vice chairman and president of GE’s global growth organization.
“We should continue to grow at double-digit rates in those growth markets, even with a global economy that’s kind of inching along,” Rice said in an interview at GE’s New York offices. “We think that there is still a significant pent-up demand for infrastructure.”
Rice pointed to near-term opportunities in sub-Saharan Africa, where infrastructure needs are great, and in India, “where we have played beneath our weight over the last 20 years.”
India’s new government and GE’s pending acquisition of power assets of France’s Alstom (ALSO.PA), which has a significant presence in the country, “gives us a completely different game today,” Rice said.
GE is shifting more toward industrial operations while shrinking its finance business and shedding non-core units such as appliances. Rice, a 36-year GE veteran, said in the past investors would question why the company was in businesses such as plastics or media.
“When we talk about a focus on infrastructure and that being the predominant thing that we do, they can see that,” Rice said. “They have more clarity than they’ve had in our 130-year history.”
The $16.9 billion Alstom deal stands to give a major boost to GE’s aims as an infrastructure company, but to keep building that focus, “I don’t think it’s a lot of M&A,” Rice said.
“We’re going to look for selective opportunities in our other businesses, and oil & gas is a place where we’ve said we would spend more, but it will be on a selective basis.”
Despite the size of the Alstom deal, GE shares are little changed since terms were finalized in late June.
“When you look at Alstom, it’s big, the operating performance hasn’t been great,” Rice said. “I think people hang on a little too much to that and not focus on what we can do with assets that may be underperforming.”
Reporting by Lewis Krauskopf; Editing by Diane Craft