LG Electronics CEO Nam Yong |
By Kim Yoo-chul
Staff Reporter
The CEOs of Samsung Electronics and LG Electronics each told shareholders Friday that the consumer electronics giants are facing tougher business conditions this year.
Referring to volatile currency moves, large investments by overseas rivals and increased competition between rivals in key segments, they each said their companies will speed up work to produce more innovative products and maintain cost competitiveness.
``Samsung Electronics is not ruling out the possibility that some nations of Eastern Europe and the Middle East may suffer from economic uncertainties,'' Choi Gee-sung, CEO of Samsung, the world's biggest technology company, said in a speech to investors held at the firm's headquarters in southern Seoul
Choi said stiffer competition is weighing on its business outlook, while foreign exchange rates are also posing a threat to its business expansion.
He said Samsung will maintain greater flexibility in its facility investments this year.
Samsung, the world's top maker of memory chips and flat-screen panels, is still hesitating to raise this year's capital expenditure of some 8.5 trillion won due to oversupply worries.
``Alarmed over such uncertainties, Samsung is tasked with maintaining a stable financial structure. We need to keep up the ongoing transition to a software-driven company from hardware-focused one,'' he said.
According to Samsung managers, Samsung was holding 12.3 trillion won as its cash assets as of the end of last year. Due to its fragile memory chip and flat-screen businesses, Samsung was passive in acquisitions.
Nam Yong, who was given his second-term as CEO of LG Electronics, said in a separate speech to shareholders that the company has been facing new challenges at a time when software has emerged as the top buzzword for technology companies.
``Internet giant Google and Apple, which weren't our competitors in the past, have become LG's biggest foes,'' Nam said, adding the next three years will be a critical period in deciding its corporate destiny.
``LG Electronics still has a long way to go in innovation. We have increased the number of our hit products. But that doesn't necessarily mean that LG has transformed into an innovation-driven company,'' the executive said.
LG Electronics trails industry leader Samsung in the global television market, while it is the world's third-biggest handset maker after Nokia and Samsung.
The company is losing some trust from investors over its lack of software-related power in smartphones and detailed strategies in three dimensional (3D) TVs, an area most leading makers are betting on for new growth.
``LG Electronics is also facing challenges in TVs from its rivals such as Sony and Panasonic. We need to inject more resources.''
Sales Growth, M&A Appetite
Samsung's Choi said it is targeting a higher operating profit and double-digit growth in sales in 2010 as Samsung is seeing an economic recovery in developed and some emerging countries.
``We are aiming to achieve double-digit sales growth and operating profit of more than the 2009 level by improving cost competiveness and boosting market share,'' he said.
Last year Samsung reported record consolidated sales of 136.3 trillion won, or $120.8 billion, and a record operating profit of 10.9 trillion won due to more demand for chip- and LCD-embedded digital devices such as PCs and TVs.
Echoed by the goals, LG's Nam said his company will seek acquisition opportunities either in environmental- or energy-related fields, though the executive declined to elaborate further.
``LG Electronics is seeing a mild recovery capitalizing on BRIC regions. We will try to strike an acquisition for those fields,'' Nam said, adding LG is aiming to become the top three technology company by the end of 2012.
The meetings saw no major disruption by shareholders, who have often made vocal demands for more transparent management or higher dividends in the past.
yckim@koreatimes.co.kr
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