Top TV makers challenged to achieve sales targets
By Kim Yoo-chul
As concerns are high about the inability of world leaders to deal with
the European debt crisis or the faltering U.S. economic recovery, the
world’s two biggest TV makers questioned the challenge of achieving
their television sales targets that had been set early this year.
The United States and Europe are strategically important consumer
markets for Samsung and LG Electronics, generating more than half the
groups’ annual revenues, respectively.
But what’s more problematic is that it’s not clear how long this economic turmoil will go on.
Consumer sentiment for digital devices was freezing and product
inventories were still high, while demand for premium televisions such
as 3D TVs has been stalled.
Volatilities in foreign currencies were unexpectedly high, forcing the
electronics duo to apply what they call ``contingency plans’’ amid
unfavorable dollar-won moves.
Samsung and LG officials said they are closely monitoring the effects of
the first-ever downgrade of the United States credit rating by Standard
& Poor’s (S&P).
Despite such unexpected alarming signs even in Europe, the Korean
electronics giants are a bit cautious for the business outlook and they
are continuing a so-called ``scenario-based’’ management strategy,
officials said.
In accordance with such uncertainties, global sales of TVs using liquid
crystal display (LCD) screens this year are expected to be well below
earlier market estimates of 220 million, a top LG executive said.
``Some market research firms were estimating that the market was at
around 215 million units, however, the outlook was quite bullish and the
growth will even be below that level,’’ said Kwon Young-soo, the chief
executive of LG Display, the world’s second-largest manufacturer of LCD
screens.
LG declined to give its outlook in the latter half, while the sector
leader Samsung also has sided with LG by saying that the remainder of
this year will be difficult.
And such a bearish business outlook even in the latter half of a year by
the industry giants is rare, and officials say the stepped-back outlook
is a first in the last few years.
Samsung warns currency volatilities
``We will try our best to achieve this year’s TV sales target despite
worries over the global economic outlook throughout this year,’’ said
Yoon Boo-keun, the head of Samsung’s TV division, Sunday.
Yoon, who is the top confidant of Samsung chief executive Choi Gee-sung,
admits that more competition between rivals and lower-than-expected
demand for digital products caused Samsung to suffer from consecutive
declines in profit.
``Situations are very tough, however Samsung won’t cut our sales target
this year,’’ said the Samsung president, adding the company’s fine-tuned
supply chain management (SCM) structure will help it save its bottom
line even amid the ongoing struggle.
The world’s biggest television manufacturer, Samsung’s target for
televisions this year is 45 million units, which officials say is quite
conservative.
``Usually, the latter half of a year is seasonally strong in terms of
demand thanks to the back-to-school season and appetites to stockpile
inventories ahead of year-end shopping season. But this year, we don’t
expect to benefit from such seasonal factors,’’ said another Samsung
executive, asking not to be identified.
Market research firms have cut their expectations for global TV
shipments citing strengthening signs of economic downturn and a lack of
interest in premium TVs such as 3D ones from much of the public in
Europe and North America.
Strengthening South Korean currency against the U.S. dollar is posing
another threat for Samsung’s overseas businesses as the gain in won
makes Samsung products less competitive than products by rivals.
``Samsung’s average dollar-won currency rates in the second half is
1,040, which was revised from an earlier 1,100,’’ said a Samsung
spokesman, adding a gain of 10 won against the greenback to cost 300
billion won to the electronics giant, annually.
LG to miss target?
Against the sector leader Samsung, its biggest cross-town rival LG
Electronics is mulling the possibility of lowering this year’s TV sales
target as LG forecast a worsening economy in Europe and the U.S. will
threaten its business outlook.
The updated business plan by LG comes after the world’s No. 3 TV maker
Sony of Japan has lowered its target for televisions in the fiscal year
of 2011 to 22 million from a previous 27 million units mostly due to the
sluggish TV demand in markets.
``LG Electronics is planning to lower its target by 20 percent to around
32 million and LG won’t spend more money for TV promotional campaigns
as a strategy to secure profitability,’’ said another high-ranking LG
executive who is familiar with the matter.
LG’s previous TV sales target was 40 million. The new plan is calling
for LG Electronics to sell 28 million TVs with liquid crystal display
(LCD) screens and 4 million plasma-based televisions, according to LG
executives.
LG, which sold 13.6 million televisions during the first half of this
year, has been known to be struggling to lower its TV inventories in
North America and Europe.
``LG Electronics is checking sales and inventory figures on a monthly
basis as the market is heading toward a downturn amid concerns about the
U.S. economy and Europe’s capacity to overcome their debt problems,’’
said a senior LG spokesman.
But the official declined to confirm whether or not it has cut its previous sales targets.
LG Electronics also predicted that the dollar-won range will remain
between 1,040 won and 1,050 won level from its early prediction of 1,080
won against the greenback.
``Chances are quite low that the U.S. economy will fall under a
so-called `double-dip,’ however, business circumstances are very tough
in last few years,’’ said the LG executive.
KOSPI, South Korea’s benchmark stock index, plunged more than 10 percent
in only the last week ― Asia’s worst performer ― with key exporters
including Samsung, LG, steel giant POSCO and the nation’s leading
automotive group of Hyundai-Kia had stretched their heavy losing
streaks, hit by heavy unloading by foreign investors, data from the
Korea Exchange (KRX) showed.
check this out: http://www.koreatimes.co.kr/www/news/tech/2012/07/129_92411.html
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