CROTONVILLE, New York General Electric Co said on Tuesday it is targeting 10 percent earnings growth and expects revenue to rise at least 8 percent in 2012 at its energy unit, which makes products ranging from gas-fired electric turbines to thin-film solar panels.
GE, the largest U.S. conglomerate, expects the unit to record an operating profit of about $7 billion this year, compared with $7.3 billion in 2010, it said in slides prepared for a presentation to analysts at its executive training compound in Crotonville, New York.
GE said it expects profit margins at the unit to come to about 15 percent of sales in 2012, steady with its expected 2011 level. The division's revenue, which accounted for 26.8 percent of the corporate total through the first six months of 2011, will reach $60 billion by 2014, up from the $37.5 billion last year.
Its eventual goal is $100 billion in revenue, though it did not offer a time table.
The company does not view inflation as a major risk to its earnings heading into 2012, said John Krenicki, a GE vice chairman who heads the energy arm.
"We were more concerned about inflation a few months ago than we are today," Krenicki said. "It's moderating, so we don't see inflation as a headwind in 2012."
The energy unit embarked on an $11 billion spate of acquisitions from autumn 2010 through early this year, buying companies including France's Converteam, Dresser Inc of the United States and Britain's Wellstream, to build up its offering of equipment used in oil and natural gas production.
GAS STANDS ON ITS 'OWN FEET'
GE is particularly focused on natural gas because it expects gas to become more competitive as cash-strapped U.S. and European governments have less money available to subsidize other energy sources, Krenicki said.
"We think things are going to have to stand on their own two feet economically," he said.
The world's largest maker of jet engines and electric turbines also said its energy arm had secured some $3 billion in orders for products ranging from gas turbines to equipment used in power-grid management.
Through the first half of the year, GE's energy unit has recorded 9 percent sales growth but seen profit fall about 14 percent due to the costs of absorbing its recent acquisitions and weakening margins in its wind-turbine business. The company in July said its energy unit would resume profit growth in the second half.
GE shares were up 16 cents at $16.34 in afternoon trading on the New York Stock Exchange.
While the company has focused a lot of attention on so-called green sources of energy, it also provides turbine technology used in coal-burning electric plants. It got a black eye early this year when GE-built nuclear reactors played a role in Japan's Fukushima nuclear disaster, when a nuclear power plant was rocked by a magnitude 9 earthquake and subsequent tsunami.
GE's rivals in the energy sector include Germany's Siemens AG and France's Alstom.
(Reporting by Scott Malone in Crotonville, New York; Editing by Maureen Bavdek, Gerald E. McCormick and Steve Orlofsky)