China, India driving GE industrial unit

By Scott Malone

NEW YORK (Reuters) - Strong demand in China and India, have put General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) on track for a 6 percent to 8 percent sales rise at its industrial unit this year, the unit's top executive said on Wednesday.

"The consumer appliance business is strong, demand for appliances is strong," said John Rice, a GE vice chairman and president and chief executive officer of the GE Industrial unit, speaking at the Reuters Manufacturing and Transportation Summit in New York.

"We don't expect that to slow up this year," he added. "It's stronger than we thought it would be. An element of this is being fueled by consumer demand, not just in the U.S. As the Chinese become more wealthy, they want nicer things."

GE's industrial unit is the second largest of the company's six operating segments and includes the products probably most associated in the public mind with the GE brand -- appliances and light bulbs -- as well as factory automation systems, a transportation equipment services business, and plastics.

In 2005, GE's industrial unit generated $2.56 billion in profits on $32.63 billion in revenues, representing 11 percent and 23 percent, respectively, of the corporate totals.

OLYMPIC OPPORTUNITY

GE is expecting to cash in as Chinese authorities build up their infrastructure in Beijing ahead of the 2008 Olympic Games, which will be broadcast by the diversified conglomerate's NBC Universal unit.

Rice said GE expects to generate about $800 million in sales of industrial and infrastructure products as a result of the Beijing build-out.

The Olympics should also boost the company's business in China over the long term, he said. GE aims to boost its sales in China from $5 billion last year to $10 billion in 2008.

Rice also sees a chance for GE to sell power-generating equipment into India, as the country develops.

"(India has) a major effort to try to figure out how to get power to people who don't have it," Rice said. "They have hundreds of millions of people in India who don't have access to power."

He estimated that Indian authorities would look to add about 200 gigawatts of electricity generating capacity over the next five to ten years -- enough to meet the demand of essentially all U.S. homes. That presents a chance for GE to sell turbines, generators and distribution equipment.

Rice said the unit is on track to hit its forecast for 15 percent to 20 percent second-quarter profit growth on a 5 percent rise in sales.