Mitsubishi to Sell New Turbine, Aims $7 Billion Sales

By Shigeru Sato and Yuji Okada

March 12 (Bloomberg) -- Mitsubishi Heavy Industries Ltd., Japan’s largest heavy-machinery maker, developed what it says is the most efficient gas turbine, targeting annual revenue from the new product of as much as 700 billion yen ($7.3 billion).

Dubbed “J-Series,” the turbine is capable of turning 60 percent of energy into electricity when natural gas is burned, Executive Vice President Yoshiaki Tsukuda told reporters in Tokyo today. That ratio would exceed the energy-to-power conversion ratio of below 60 percent for conventional gas turbines available in the market, he said.

Mitsubishi Heavy aims to capture 30 percent of global gas turbine sales by 2015 in a contest with General Electric Co., the current market leader, Tsukuda said. The Tokyo-based manufacturer currently has a 10 percent market share.

“The sales target is a feasible one,” said Eiji Tomaru, a senior analyst at Mizuho Investors Securities Co. in Tokyo. “But the key is how speedily the U.S. can get its battered economy back on a recovery phase and stimulate demand for power infrastructure.”

Mitsubishi Heavy identified the U.S., Europe and Japan as initial core markets for the newly developed turbine and expects to make its first deliveries in 2011, Tsukuda said. More than 65 percent of U.S. electricity is produced from coal-fired generators, he said. Mitsubishi Heavy will later aim to increase sales in Asian and East European nations.

“Sooner or later, the U.S. will start replacing its outmoded coal-fired thermal power plants, and plants run on cleaner fuels like natural gas and nuclear reactors will become the main sources,” Tsukuda said.

Mitsubishi Heavy declined to disclose the total cost of developing the turbine or its unit sales price.

Tomaru of Mizuho estimates Mitsubishi’s current gas-turbine revenue at about 400 billion yen.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net.