By Kim Yoo-chul
LG Hausys, an LG Group affiliate that makes quartz and acrylic surfaces, said Thursday that it has reached an agreement to use Dutch-based company Tech-Wood’s patented technology aimed at boosting the output of profitable products.
The strategic partnership comes after LG Hausys is being asked to diversify its business profiles to find new earnings propellers from overseas amid the sluggish local real estate market.
The company has seen growth in profit and revenue, however, the curves are not impressive as the sales of its main products including floor tiles and sheet products are dependent upon the housing market. Weak consumption and tightening loan conditions mean real estate transactions have maintained sluggish, threatening the firm’s bottom line.
``Under the agreement, LG Hausys will use various patents owned by Tech-Wood for the output of wood fiber thermoplastic composite (WFC) products,’’ said Lee Dong-joo, the chief of LG Hausys’ public relations office.
Lee declined to unveil further details such as the payment of royalties and contract terms.
Tech-Wood provides wooden products. Its product groups include siding, decking, and riverside sheet-piling. Its products are used in window frames and garden furniture. The company is headquartered in Rijssen, the Netherlands.
LG Hausys said it is planning to start the production using the cutting-edge WFC technology within the first half of this year, according to Lee.
It is the first company on this planet to produce wood in this manner, the company said in a statement.
Adding fiber to the conventional plastic composites (WPC) as reinforcements rather than wood flour increases mechanical properties such as strength, elongation, impact energy. Weight reduction, energy and noise adsorption are other advantages.
The most important markets today for WPC technology are automobiles, construction, furniture in addition to industrial and consumer products made by compression moulding.
``As a result wood fiber composites have widely been used in the construction industries in North America and have been introduced into personal vehicles in Europe, South America, and Asia,’’ said Lee from LG Hausys.
The latest development will help the company, led by Chief Executive Officer Han Myeong-ho, expand its materials business in Europe, Asia and North America. But Lee did not elaborate on sales targets.
``So far, LG Hausys has been creating revenue from the local market. The company should reduce its heavy dependence on the domestic market in terms of revenue and that’s the other reason why we’ve signed a deal with the Dutch firm,’’ Lee said.
LG plans to increase the portion of its overseas business to more than 40 percent through talks with LG-invested facilities and expanding strategic partnerships.
LG Hausys, which was previously spun-off from LG Chem, reported 72.3 billion won in operating profit for last year, an increase of 13 percent from the previous year, while its revenue rose by 10 percent to 2.45 trillion won in 2011.
``LG Hausys will benefit from its aggressive involvements for energy-consuming products and strengthening its product mix-up,’’ said E-Trade Securities, saying it maintains its ``buy’’ rating on LG Hausys stocks with a target price of 117,000 won.