Aug 14, 2009

GE Predicts Future Growth for Water Purification

Company focusing on large-scale purification, saying business is well-aligned with major trends

General Electric Co. (GE) predicts that water purification could grow to be a major growth driver within years, just as its wind unit did, Reuters reported.

The largest U.S. conglomerate has built its water unit for about a decade. It focuses on large-scale treatment and purification for municipal and industrial water users.

With an estimated $2.5 billion in revenue, the water business remains a sliver of the $156 billion in sales the company is expected to pull in this year.

While the unit's smaller size has led some investors to speculate if GE might sell it to focus on higher profits, executives with Fairfield, Conn.-based GE said water has the potential to become a major profit contributor.

"What GE tries to do is to align the company with some of the mega-trends, the mega-challenges of the world. Energy is one, healthcare is the other, and the third one is water," said Heiner Markhoff, president and chief executive of GE Water & Process Technologies.

GE is not the only major multinational to see potential in water. Its rivals include German conglomerate Siemens AG and U.S. chemical company Dow Chemical Co., as well as smaller companies including Danaher Corp. and Nalco Holding Co.

Large-Scale Focus
As it focuses on large-scale purification, GE has pulled back from residential water treatment. Last year it moved its residential business into a joint venture with U.S. industrial Pentair, Inc., which owns 80% of the enterprise and handles sales and distribution.

Some analysts think GE may soon exit the water business.

"We think it is increasingly likely that GE may seek to divest its $2.5 billion water and process technologies platform over the next one to two years," Bank of America/Merrill Lynch analyst John Inch said.

The company remains committed to water, Markhoff said.

"We have a lot of support throughout the energy infrastructure business, up to the chairman of the company," Markhoff said. "We see clearly the medium- and long-term potential of this business, and it is very well aligned with the major trends."