The shale gas boom has led to an emerging theme in the industrial goods space. Where some players have been hit by declining gas prices such as railroads, others have seen remarkable growth in their businesses. And in this list, the gas turbine industry must be mentioned. The following four companies have been the global leaders in this industry:
1) General Electric Company (NYSE:GE)
2) Siemens AG (ADR) (NYSE:SI)
3) Mitsubishi Heavy Industries (M.H.I)
4) Alstom (NASDAQOTH:ALSMY)
It should be understood that though the US provides a healthy market for gas turbines, the global demand for this product is extremely weak.
Following the release of market share data and overall order intake for FY12, as well as commentary from various power generation equipment vendors over the recent earnings season, the following is a quick update on trends within the industrial gas turbine sector:
Orders were close to 2009 lows, but the US and South Korea were bright spots: Both the McCoy data and the Power Generation Vendor Data highlight how weak 2012 was for thermal power order intake, although the trends were less negative in the second half. Gas turbine unit orders / MW orders were down -8% / -13% respectively (compared with -45% / -41% respectively in the 1H12). Of the major markets, all were down double-digits in 2012 except for South Korea (the #4 market in 2012) and the US, where MW orders were up +43% / +11% respectively.
The largest market was again China, with 16% of the global total (in-line with 2011), and with the US at #2; General Electric Company (NYSE:GE) recently highlighted that their US IGT (Industrial gas turbine) order intake last year was the highest in a decade. In the EMEA region, Saudi Arabia, Russia and Algeria were major markets, ranked #3 / #5 / #6 respectively on a global basis. The #7 market Japan showed gas is not winning share despite the Fukushima accident, with orders down -41% from 2011.
Pricing: Commentary from power gen OEMs suggests pricing remains subdued, although at least GE’s pricing has turned positive.