LG sees sales up 7 percent this year

LG sees sales up 7 percent this year

Leony Aurora, The Jakarta Post, Jakarta

As the economy slows down, a local unit of South Korean
electronics giant LG sees a lower-than-expected 7 percent rise in
sales this year, with the number of lower-end units sold on the
decline.

LG Electronics Indonesia (LGEIN) recorded sales of US$352
million in 2005, up from $330 million booked in the previous
year, president director Lee - Kee Ju said during the
announcement of the company's year-end report on Thursday.

Domestic sales amounted to 68 percent of total sales, or some
$240 million, while the rest came from exports.

"The biggest portion from domestic sales is from tv sets,
which contributed 39 percent of sales," said Lee.

Area sales manager Hendru Susilo said the recent fuel price
hike as well as several massive natural disasters at the
beginning of the year slowed down sales of lower-end products,
such as conventional televisions, causing the company to miss
their target of 30 percent revenue growth.

Although by unit sales were down, strategic and premium
products such as two-door refrigerators, flat screen televisions,
plasma televisions and front-loading washing machines boosted
revenues, said Hendru, without elaborating.

For next year, the company will target sales growth of 30
percent, focusing its promotion on the higher-end products.

"The (soccer) World Cup next year will hopefully push sales of
conventional televisions," said Hendru.

LGEIN plans to increase production of color television
slightly from 1.45 million units this year to 1.5 million in
2006, while refrigerator production will jump by 78 percent to
1.6 million units next year from 900,000 units this year.

As demand increases, the company also plans to boost its
capacity of plasma televisions more than seven-fold to 15,000
units assembled annually in 2006, up from 2,000 units in 2005.

To increase its capacity, LGEIN is ready to spend $114 million
in investment, comprising $38 million for research and
development and $76 million for production facilities.

Lee declined to elaborate on the planned investment, saying
the company would publish it with the announcement of its merger
with another LG local unit LG Electronics Display Devices
Indonesia (LGEDI) on Jan. 7.

This year, LGEIN spent $92 million in capital expenditures,
including an investment of $33 million on research and
development.