Who Is Going to Win in the Gas Turbine Industry? – General Electric Company (GE), Siemens AG (ADR) (SI)

Market share – MHI above trend, Siemens AG (ADR) (NYSE:SI) below trend, GE rebounds: GE’s market share showed a decent increase from 39.8% to 42.8% y-o-y (although orders were still down -23% y-o-y), and was in-line with its 5-year average; share was helped by a rebounding US market (GE had 48.6% share in an up market). Mitsubishi Heavy Industries also put in a strong performance (global share moved up 400bps to 18.1%, vs. a 5-year average of 11.5%), helped by its South Korea position (59% share in an up market) and 52% share in China. This came mostly at the expense of Siemens (it saw a -39% drop in orders, and share was >300bps below its 5-year average), whose share was down to 27.7% from 32.6% in 2011. Alstom’s share remained at a low-mid single digit level.

Two Stocks: It is encouraging to see that trends appeared to stabilize at year-end, and the comps are pretty easy for 2013. The Street believes that the data confirms the view that GE is well-placed to take market share in its industrial businesses this cycle as a result of higher R&D spending and the Global Growth initiative, and less focus on GE Capital / NBCU; the forecast of a -30% drop in its Gas Turbine shipments this year should capture last year’s order softness. For MHI, the weakening Japanese yen and its new US plant suggest further share gains are likely.

Foolish Bottom Line

One can infer from the article that GE is definitely at the top of the ladder in this segment and is expected to continue this momentum in the near future.

The article Who Is Going to Win in the Gas Turbine Industry? originally appeared on Fool.com and is written by Masam Abbas.

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