LG Electronics forecasts uncertain outlook for 2009
The South Korean firm recorded sales of $3.8bn in 2008, but unsure of 2009.
LG Electronics, a leading consumer electronics firm, recorded sales of $3.8bn in the Middle East Africa (MEA) region in 2008 but was less certain about the outlook in the region for 2009 due to a consumer spending slowdown, senior managers of the company said on Sunday.
The firm had revised its initial growth target for 2009 made four months ago as the economic slump forced consumers to cut spending on electronic goods, Ki Wan Kim, chief executive officer of LG in the MEA said at a press conference in Dubai.
“I made a forecast in October last year for some growth this year but it is now not easy to make any growth this year,” said Kim.
LG was outperforming its competitors in MEA with a 13 percent share of the electronics market, the South Korean firm said. The region represents around five percent of the global electronics market, it added.
The biggest growth opportunity for the company in the region was the GSM handsets market, into which it had been a late entry, global chief executive officer Yong Nam said at a press conference in Dubai.
LG said MEA would be one of the regions it would focus its investment in solar power as it increased its research and development (R&D) spending in future growth areas, also including commercial air conditioners and business solutions, it expected would expand and become more profitable once the economy improved.
Globally, the company said it would raise its spending on R&D from $1.3bn in 2008 to $1.5bn in 2009 as a strategy to weather the economic turbulence, the firm said. It would also increase its marketing spend in an effort to build brand awareness.
But Nam said the company was assessing whether it needed to close some of its factories as it faced falling revenues and profitability. It was also targeting a reduction in expenses of more than $2bn in 2009 including manufacturing and indirect costs.
A ‘crisis war room’ had been established in the Middle East and at the firm’s global headquarters where executives could manage the company’s aggressive business plan during the financial crisis, he said.
Strength of TV sales in the commercial and domestic sectors in the MEA had been encouraging, alongside air conditioners, a traditional strong performing market Nam said.
The company’s global sales with turnover rose 20.8 percent to nearly $46bn in 2008.