LG appliances see hope in US market recovery
LAS VEGAS - LG Electronics expects a double-digit growth in home appliance spending in the United States, a good sign in a global economic landscape dimmed by European debt crisis.
How to cope with this contrast is a challenge LG should take on in order to stay on the better side of the bottom line, said Shin Moon-beom, new president of LG’s home appliances division, during a news conference for Korean media here last week.
``Europe’s situation affects us negatively,’’ Shin said. “But we are seeing some signs of recovery in U.S. consumer spending.” He spoke on the sidelines of this year’s International Consumer Electronics Show (CES) in the U.S. desert city.
The real estate market in the United States is improving, making LG think it will see double-digit growth in appliances this year.
The United States is expected to take up 30 percent of LG’s revenue this year, though Shin declined to unveil its target for 2012.
Macroeconomic moves are the barometer of gauging the profitability of almost all home appliances companies because consumers usually cut back on spending when economies are in trouble.
Shin said LG’s home appliances division grew 12 percent last year from the previous one, far better than the industry growth rate of 6 percent.
``This year, LG will do its best to expand our home appliances business by more than 10 percent. We need to continue the current inspiring growth rates,’’ said the executive.
``We haven’t changed our $20 billion revenue target for the end of 2014 despite growing uncertainties. LG will release value-added products to attract more customers,’’ he said.
As its next business strategy to move away from its heavy dependence on washers and refrigerators, Shin said this year will be a turning point to boost brand awareness both in developed and emerging markets.
``LG just advanced into healthcare-related sectors and we don’t see the attempts as paying off immediately, however, healthcare businesses will receive more investment as a strategy for sustainable corporate growth,’’ the division head said.
In line with this cautious approach, LG plans to invest more in countries where it has competitive brand recognition. India and Thailand are two target markets for next year.
``Emerging markets are better than developed countries in terms of economic growth. That also means developed markets have some replacement demand, not new demand. India, for example, has a penetration rate of home appliances of less than 30 percent, giving us good business opportunities,’’ said Shin.