Electrical Equipment & Multi-Industry


GE vs Siemens in Gas Turbines: Siemens Surges YTD in Large Power

Preliminary Market Data Shows Siemens and GE Gaining Share - Preliminary data from McCoy, a leading provider of industry data on Gas Turbines shows a surge in Siemens market share in Large Power gas turbine orders YTD.  While we partially discount the surge given the lumpiness of the data, and in long cycle terms a relatively short 6 months, it is still noteworthy.  The data also shows the market overall is still weak, with a 31% decline yr/yr in megawatts (MW) ordered in H1.  In total, Siemens ended H1 with 34.6% of global gas turbine orders, measured in MW (up 7.3pts), with GE at 31.7% (up 1.3pts).  We remain neutral on both GE and Siemens reflecting our cautious view on Power Generation markets.

Figure 1:  SIE & GE Gain Share in H1 Global Gas Turbine Orders

Source:  McCoy Power Reports

Big Siemens Gains in Large Power - Siemens posted a strong surge within the Large Power segment (Utility scale) of the gas turbine market, picking up ~7pts of share to 30.7% in H113 from 23.8% in H112.  The gain was not all at GE's expense however, with GE losing ~3pts of share to 15.6% this year, versus 18.4% last year.  Mitsubishi was another notable share loser on large power in the first half, losing over 15 points of share yr/yr.  Mitsubishi has enjoyed some accolades for its new J turbine and we suspect the large share drop is due to the lumpiness we noted above.  It is also easier for share percentages to move around dramatically, when overall activity is low.

Figure 2:  SIE Share in Large Power Up 7pts Yr/Yr in H1, to 39.7%, Outpacing GE

Source:  McCoy Power Reports

GE Dominates Oil & Gas/Industrial - Aside from the Large Power GTs, GE still dominates in industrial purpose gas turbines, with nearly 4x the share of SIE, the next largest competitor in industrial.  Combining GE's aero-derivative and oil & gas turbines, the company's share of the market increased ~4pts yr/yr to 16.1%.  Siemens combined oil & gas/other gas turbine share increased 0.4pts to 3.9%.

Figure 3:  GE Still Dominates Oil & Gas/Industrial Use Gas Turbines

Source:  McCoy Power Reports

Siemens Orders Today in Saudi/Russia - Siemens booked 8 units today with Yamal in Russia for the SGT-800 industrial gas turbines, which is 45-50MW machine.  Siemens has generally had a stronger position than GE in Russia, so this looks like a natural win for Siemens.  In addition, Siemens booked a contract for 10 SGT6-5000F turbines designed for synthesis gas and diesel fuel with Saudi Aramco.  These are F frame machines in the 200+ MW range each.  Interestingly, 6 of the units will be manufactured in Saudi Arabia.  Siemens constructed a facility in Dammam to manufacture and provide servicing for gas turbines and related equipment in Saudi.  Siemens called it their largest order ever with Aramco and a validation of the regionalization strategy.  We don't know if GE directly competed for this order, but Saudi has historically been a strong GE bastion that perhaps will get split more evenly with Siemens over time.


Analyst Certification

Each of the Vertical Research Partners, LLC analysts whose names appear on the front page of this research report hereby certifies that the recommendations and opinions expressed in this report accurately reflect such analyst's personal views about the subject securities and issuers.

Transactions in Securities

Vertical Research Partners, LLC is a provider of equity research and consulting services. We are not a registered broker-dealer and do not trade or carry proprietary positions with firm capital in any covered or other securities.

Employees and partners of Vertical Research Partners, LLC may from time to time own beneficial positions in securities of the issuers on which we cover. Our employees and partners are prohibited from transacting in such securities once we have begun the analytical process that may result in a change of recommendation or within 48 hours after a change of recommendation. We require our employees and partners to pre-clear all transactions in covered securities with us.

Other Disclosures

Although the information contained in this document has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. We make no warranties or representations relating to the accuracy, completeness, usefulness or timeliness of such information and opinions and we assume no responsibility to anyone relying on such information or opinions for their particular purposes. Such information and opinions are subject to change without notice and we assume no responsibility to update or amend them. This document, and all its contents, unless specifically indicated otherwise, is copyright 2017 Vertical Research Partners, LLC. All rights reserved. This document and its contents are solely for the use of clients of Vertical Research Partners, LLC. Neither this document nor any of its contents may be excerpted, copied, forwarded or otherwise distributed to any other party without our prior, express, written permission. We are not responsible for the consequences of any trading conducted in reliance on any of our content. The appropriateness of a particular security or strategy will depend on an investor's individual circumstances and objectives, and the securities and strategies that may be discussed in our content may not be suitable for any particular investor. Investors should independently evaluate particular securities and strategies with the assistance of financial advisers.