LG aims to beat Samsung where it can

Biggest home airconditioner maker gunning for big growth in sales

By Kim Yoo-chul

LG Electronics, one of the world's top manufacturers of home air conditioners, is looking for major growth in air-con sales despite market uncertainties, a top company executive said Wednesday.

"LG is aiming at a 20 percent increase in global air conditioner sales throughout this year as we will boost output," said Nho Hwan-yong, the president of the company's air conditioning and energy solution (AE) division.

The division head disclosed the target at a news conference unveiling its latest air conditioners at its research and development (R&D) center in downtown Seoul.

Rising raw material prices, exchange rate fluctuations, an increase in oil prices and uncertainties in the Euro Zone could hurt its profit margins, though easing global economic woes may cushion the impact of the challenges, he noted.

Nho said LG saw growth of 30 to 40 percent in sales in 2010 from the previous year, helped by increased demand in Asia, South America and Europe.

LG plans to produce 17 million air conditioners by the end of this year, according to the executive.

``India and Brazil are quite attractive; leading us to release advanced models at competitive prices. The annual output at our lines in Thailand, India and Turkey will rise to 2 million in 2011,’’ he told reporters, adding the annual output capacities in Brazil and Saudi Arabia will also rise to 1 million.

LG is planning to produce 9 million air conditioners in Korea and China, though the company spokesman said it will maintain flexibility in production control.

LG’s target in air conditioner sales by 2013 is $10 billion, over 30 percent of the company’s $30 billion revenue plan in the home appliances sector.

It is expected to see a turnaround in profit from the first quarter of this year, while its market share target in Korea has been set at 50 percent, Nho said in the conference.

The executive added; ``LG will invest at least 500 billion won only in new growth sectors such as solar cells and light-emitting diodes (LED).’’

Duel with Samsung

LG Electronics is being chased by its biggest rival Samsung Electronics in the home appliances segment, where the former has had continued the leadership over the last decade.

The consumer electronics pair is engaged in intense competition with the release of feature-added and function-enhanced white goods.

``LG and Samsung are announcing ambitious sales targets and releasing value-added and environmentally-friendly products on hopes of a recovery of the global economy,’’ said a Samsung executive, asking not to be identified.

Although sales were sluggish in developed markets over the last two years, growth in emerging economies will rise to 9 percent this year, according to market analysts.

Samsung is leading LG in mobile phones and televisions, while LG is ahead in white goods. Samsung Electronics Vice Chairman Choi Gee-sung is determined to lift all Samsung consumer products to the top.

Samsung said its home appliance division was aiming to reap $30 billion in sales by 2015, higher than LG’s $20 billion target for 2014.

LG Electronics said it will see its share of the global home appliance market increase to around 14 percent in 2011 from 12 percent last year.