Going into emergency mode
LG Electronics plans cuts in TVs, smartphones
By Kim Yoo-chul
Korea’s major players are retooling business plans and strategies with the eurozone crisis spinning out of control amid mounting economic uncertainties due to a slowdown in the United States and China.
LG Electronics, the world’s second-biggest manufacturer of flat-screen televisions, is planning to cut its earlier targets on strategic products including smartphones and televisions for this year amid the prolonged global economic downturn.
Cross-town rival, Samsung Electronics, is mulling possibilities to restructure key businesses in Europe and other developed nations, though the Korean electronics duo are still confidant of overcoming the difficulties, said officials from the companies.
``LG Electronics’ key decision makers are currently in deep discussions over the intensity of production cuts in Europe as the situation isn’t favorable,’’ said a high-ranking LG Electronics executive in a phone interview with The Korea Times, Monday.
The executive added LG Electronics, which has been seeing a mild recovery in its smartphone and television businesses, is faring well in emerging economies such as India, Indonesia and even China.
``LG Electronics Chief Executive Koo Bon-joon has an interest in cutting costs and we are reviewing our business plans based on a zero base,’’ according to the executive.
An LG spokesman said it has already shifted its sights to quality growth not just quantity growth and the latest business plan was mainly due to the company’s intention for an increase in profit throughout this year.
LG Electronics earlier said it was aiming to sell 30 million flat-screen televisions using liquid crystal display (LCD) technology, while the company’s TV chief Havis Kwon had told reporters that its TV division didn’t see any problems to achieve this year’s one million sales target for 3D televisions.
LG has still big ambitions in smartphones, as it plans on selling 35 million this year, of which 8 million should be long-term evolution (LTE) enabled.
``Right now the chances of LG achieving these goals seem pretty slim, according to market analysts.
``Despite this, should LG secure its bottom line in profit in the second quarter of this year as most of LG’s sales come from two markets _ its native South Korea, and North America,’’ said a senior fund manager from an Europe-based investment bank in Seoul, asking not to be identified as he wasn’t given the authority to officially to speak to the media.
Samsung feeling pinch
Overall, the situation isn’t much different for Samsung, though senior executives contacted by the English-language daily said the company is positive on effectively handle the worsening situations.
``In Europe, Samsung is also planning to re-adjust earlier targets from televisions to home appliances and smartphones. We are trying our best to meet this year’s targets, though the company is open to lowering its earlier projections,’’ said a senior Samsung Electronics executive on returning to his office in Seocho-dong, where Samsung’s headquarters is located.
Samsung, an official sponsor for the upcoming Summer Olympics in London, expects a series of major sporting events including the current Euro 2012 football tournament to boost consumer spending on electronics goods.
``Samsung Electronics is ready to aggressively promote our strategically-important gadgets such as the recently-released Galaxy SIII smartphones,’’ said a Samsung official.
Spain asked euro-region governments over the weekend for as much as 100 billion euros ($126 billion) to help shore up its banking system, a sign Europe is tackling a crisis that has roiled markets around the world. Chinese data showed exports grew last month at more than double the pace analysts estimated and crude oil imports rose to a record high.