The Asia-Pacific region will be a key growth market for French industrial giant Alstom as it refocuses on its power and rail transport businesses following a massive government bailout, company officials said yesterday.
Currently, the region accounts for 15 percent of Alstom's global sales, behind Europe and North America, said chairman and chief executive Patrick Kron.
The region's share of Alstom's global operations should increase in the next several years as Asia's projected high economic growth drives demand for more transport links and energy to power emerging industries, Kron said.
He declined to give firm estimates.
"Asia for us is a key geographical area, it's a key market," Kron said at a news briefing in Singapore, where he attended the inauguration of a state-of-the-art driverless underground train system built by the company.
"We believe that we have strong prospects for Asia and these prospects, we expect to turn them into contracts."
Between the year 2000 and 2010, China's economy is projected to grow at an average 5.7 percent, India by 5.0 percent and Southeast Asia by 4.5 percent, according to Alstom figures.
By 2020, Asia should account for 50 percent of the world's electricity consumption, up from 28 percent in 2001.
Growing environmental concerns, which will force many Asian countries to upgrade or change existing power generators to comply with international pollution standards, should also mean more business opportunities.
As for Alstom's other core focus, Kron said "Asia will be the biggest area for development of rail transport."
Outlining the potential for rail links, Kron said Asia has 148 cities with a population of more than 1 million, and 62 more with inhabitants numbering more than 2 million, and only 35 of these cities are equipped with metro train systems.
This does not include planned rail links between cities as well as across countries.
Addressing Alstom's financial woes which led to a 2.8 billion euro (US$3.2 billion) rescue package from the French government, Kron said the company expects to generate positive cash flows during its 2005 to 2006 fiscal year.
Alstom is selling its energy transmission and distribution business, has asked shareholders for a capital increase of 600 million euros and negotiated a refinancing plan with its creditor banks.
Meanwhile, the company will refocus on its core competence of power generation and rail transport, while still keeping its marine concerns, Kron said.
"My clear message here is it [the restructuring] gives us the means to operate under normal conditions," Kron said.
"Typically, these ingredients should lead to much better profits and cash generation," he said.
Alstom currently has less than 1 billion euros in shareholder equity but carries debt of 4.9 billion euros, with total liabilities, including pensions, approaching 9 billion euros.
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