GE Wins Large Brazilian Contract - Analyst Blog

GE Transportation, a unit of General Electric Co. (GE), clinched the largest locomotive purchase order in Brazil from MRS Logistica S.A. (“MRS”), a Brazilian rail operator. The announcement was made public at InnoTrans 2010, the world's largest rail exhibition in Berlin, Germany.
 
General Electric will be supplying 115 AC44i locomotives to MRS, equipped with fuel efficient and low emission technology, over the timeframe 2011 to 2015. As per the agreement GE may also receive an additional contract for 100 locomotives in future. GE Transportation's plant in Contagem, Brazil, will be manufacturing the locomotives, while key components, including the 12-cylinder FDL diesel engine, will be supplied by the company's plant in Grove City, Pennsylvania, USA.
 
The order reflects the growing demand for railways in Brazil, as the country is actively engaged in infrastructure development plans. Brazil provides substantial growth opportunities for General Electric, especially with recovery of the railroad industry in the country after being privatized in 1996.  
 
General Electric has one of the best infrastructure franchises worldwide with solid organic growth rates, exposure to favorable secular trends and a large installed base supporting a growing annuity-like service business. Infrastructure businesses of the company are helping to build energy, health, transportation and technology infrastructure of the new century. These businesses provide products and services that help the developing regions to participate in the global economy, while also assisting the developed regions to upgrade with cleaner, more efficient and better infrastructure know-how.
 
However, the company's global expansion is subject to economic and political risks pertaining to diverse operating geographies.
 
Operating in more than 100 countries globally and employing about 300,000 people worldwide, General Electric Co. is a diversified infrastructure, finance and media company. Within the energy sector, the company aims to develop and install technology for the efficient use of natural resources. General Electric competes with the likes of Honeywell International Inc. (HON), Siemens AG (SI) and United Technologies Corp. (UTX).
 
We currently maintain our Neutral rating on General Electric, with a Zacks #3 Rank (short-term Hold recommendation) over the next one-to-three months.
 

 
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