Samsung bullish on appliance growth
Vows to tackle uncertainties in materials costs
By Kim Yoo-chul
Samsung Electronics leads its biggest cross-town rival LG Electronics in almost all consumer gadgets such as TVs and smartphones. However, LG still has the edge over Samsung in air-conditioning.
But Samsung is looking to overtake LG in that sector as well, with company chief executive Choi Gee-sung giving more authority to his top confidant Yoon Boo-keun. Yoon helped Samsung beat Japan’s Sony to become the world’s biggest TV manufacturer, according to company officials.
Samsung executives have vowed to strengthen the product quality of the firm’s air conditioners after a rare public apology was issued over malfunctions of its products last year.
Now the company has confirmed its intention to surpass LG in terms of growth rates.
``Samsung will grow by more than 15 percent globally in air conditioners this year from the previous year,’’ said Samsung senior executive vice president Park Jae-soon, Thursday. LG’s growth projection for this year is 10 percent.
Speaking to foreign and local media, the executive said Samsung should effectively tackle lingering problems like global economic uncertainties, rising raw material costs and the fluctuation of foreign currencies.
``Last year was better than a year ago. This year, Samsung is being challenged to overcome economic uncertainties. But we’ve been prepared and those expected risks won’t threaten our bottom line,’’ he said.
Samsung released new models for this year in an event Thursday held at its head office in Seocho-dong, Seoul.
The profitability of home appliances is dependent upon macro-economic moves because consumers usually refrain from big purchases when economies are in trouble.
The company says it’s eyeing China, Thailand, India and Brazil among other countries to expand its home appliances businesses, including air conditioners. It runs manufacturing bases for such products in the four countries.
``We will accelerate the so-called `localization strategy.’ We believe we have done quite well so far and we will continue to do better,’’ Park said.
The firm’s home appliances division took up 8 percent, or about 11 trillion won, of the total revenue of 150 trillion won that was reported in 2010.
Park said air conditioners accounted for some 20 percent of all home appliances by revenue.
``In order to achieve this year’s revenue target, Samsung is introducing more premium products. Rising tensions over Iran won’t have a negative impact on us,’’ he added.
In comparison, LG said it expects its air conditioning unit to report annual sales of around $10 billion by 2015.
Samsung is adding more advanced technology to air conditioners to make them even ``smarter.’’ Its devices offer comfort, quiet operation and are environmentally-friendlier.
But more technology will mean heavier costs.
The Samsung executive admitted that the prices of new models are becoming more expensive. New air conditioners that the firm introduced are in the 2.3 to 5.6 million won price range, according to company spokesman Ko Ho-jin.
``Thanks to rapid technological development, home appliances are smarter and come with various entertainment functions, guaranteeing greater comfort in our new models,’’ Park told reporters.
Samsung is in the process of integrating applications that have been scattered in refrigerators and television units, though the executive declined to elaborate further.
Appliances for a ``wired’’ home have long been on the market. However, the recent hectic advances in mobile computing initiated by the rise of smartphones and tablet PCs have expanded their growth potential.
Although Yoon Boo-keun didn’t attend the event, the head of Samsung’s consumer electronics division, he is going to meet with South Korean and foreign media next week at the International Consumer Electronics Show in Las Vegas to unveil the company’s latest business strategies in home appliances.
In a counterattack, the head of LG’s home appliances division Shin Moon-bum will hold a separate press conference at next week’s trade show said LG spokesman Jerry Kim.