General Electric expects to record double-digit revenue growth in the Middle East, North Africa, Turkey and Pakistan in 2019, despite a slowing global economy and operational challenges facing the wider company, its regional president said.
"[Our region] performed very well last year with double-digit top line growth and we are optimistic of the same this year," Nabil Habayeb, president and chief executive of the US multinational's regional business, told The National.
GE has operations spanning utilities, health care and aviation, including multibillion-dollar contracts with regional governments. In Iraq, which is courting American and European companies to help rebuild its crippled power network following years of war, GE is competing with Germany's Siemens to revive the sector by undertaking a project to add 14 gigawatt of capacity.
Iraq's electricity minister, Luay Al Khateeb, told The National this month that the government was favouring Siemens' proposal, months after reports emerged last year suggesting that the Iraqi government was being pressured by Washington to select GE.
However, both companies have signed preliminary contracts with Iraq for the planned capacity projects, and Mr Habayeb said he “doesn’t listen to rumours” and only concentrates on working with his customers to reach an agreement that works.
"We do have a lot of US advocacy support. We stay out of the political side but our competitors also get a lot of support from their governments in their projects overseas and, let's face it, a lot of governments are interested in rebuilding Iraq.
“Take the issue of gas flaring and energy independence, the power infrastructure, healthcare systems, all of that they have to rebuild,” he said.
Mena, Turkey and Pakistan are GE's fastest-growing regions outside the US, accounting for the largest backlog of committed contracts, Mr Habayeb said.
"There is huge potential in this part of the world," he said. Among the markets GE is eyeing for potential expansion are: Pakistan, with its 180 million people and package of reforms from its new government focused on renewables and health care; Saudi Arabia, given the emphasis its leaders have placed on green energy; Egypt, with its population of 100 million; Iraq, Jordan and Lebanon; and – when unrest subsides – Sudan, Libya, Yemen and others, Mr Habayeb added.
Growth in the Middle East and wider region is expected to be a significant contributor to the planned turnaround of the GE group, which suffered one of the worst years in its 126-year history in 2018 and is undergoing a restructure to restore growth.
The company posted a loss of $22.8 billion in the third quarter of last year – among the largest in US corporate history. Its shares were down around 65 per cent over the past two years as of this January. Earlier in 2018, GE was hit with an $11bn charge and disclosure of accounting investigations by US regulators.
Chief executive Larry Culp replaced John Flannery last October, and is working to revive the company's fortunes. GE beat sales estimates for the fourth quarter but the board still opted to slash the quarterly dividend and restructure GE's power unit, which lost $631 million in the third quarter. All the above measures, and more, are expected to strengthen the balance sheet and put GE on a firmer footing.
The Middle East business felt some impact from the wider struggles, and it continues to review headcount and resources in the markets in which it operates, said Mr Habayeb.
“I cannot say there hasn’t been an impact – of course there has. We had priorities to work on, but I’m proud of what we’ve done in the region, and for us to work through what has been going on in terms of transformation and other headwinds externally, to deliver double-digit growth has been great,” he added.
External headwinds include geopolitical tensions, which affect government decision-making, budgets, and global trade tensions. Despite this, the chief executive is confident the business will grow.
“The group wants to continue to grow the overall pie, and as we grow the pie, this region will grow with it,” he said.
