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April 18, 2014 5:03 pm
General Electric, the US manufacturing and finance group, still expects healthy growth in China this year, in spite of mounting concerns about the country’s economy, its chief financial officer has said.
Jeff Bornstein said GE expected its markets in China to grow faster than the economy as a whole, as it served areas that were priorities for the government, including healthcare and oil and gas production.
“We still expect China to be a good source of growth for us for the rest of the year,” he told the Financial Times.
GE’s industrial sales growth in China slowed sharply last year, from 20 per cent in 2012 to 7 per cent in 2013, and it suffered a 33 per cent drop in orders there for the first quarter of this year.
However, Mr Bornstein said the pattern of orders was “very lumpy” because of the timing of bookings from aircraft manufacturers and oil companies, and the underlying picture was still showing robust growth, with orders for medical equipment up 13 per cent.
GE does not expect to be much affected by the “mini-stimulus” announced by the government at the beginning of April, which was focused on areas such as railway lines and housing for low-income families, but believes it is in markets that were already set for strong growth.
Speaking after GE reported earnings for the first quarter of 2014 that were slightly ahead of analysts’ expectations, Mr Bornstein said: “Based on our range of businesses, we should grow faster than the Chinese economy, and we have been.”
Some other US companies have also been reporting that growth in China is still healthy. David Cote, chief executive of Honeywell, the aerospace and automotive components company, told analysts on a call to discuss the company’s first-quarter earnings on Thursday that all of the company’s divisions “grew double-digits organically in China in the quarter.”
Also on Thursday DuPont, the US chemicals group, expressed confidence in China as it reaffirmed its guidance that its earnings would grow by 8-15 per cent this year, in spite of taking a hit from higher natural gas costs in the first quarter caused by the cold weather in the US.
Ellen Kullman, DuPont’s chief executive, told analysts that “a stable China” was one of the principal reasons for retaining that guidance.
She added that there was “a lot of noise about China out there,” but DuPont “saw positives” from most of its divisions there, with businesses serving the automotive industry doing particularly well.
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