LG scales down local electronics sales outlook

LG

Electronics (Thailand) Co, the local distributor of LG electrical appliances from South Korea, predicts sales of electrical appliances will be badly hit by the economic downturn this year.

Alongkorn Chujit, deputy managing director, said the 80-billion-baht electrical appliance market, excluding mobile phones, is expected to see a contraction of 8-10% this year, against flat growth in 2015.

The contraction was attributed to a sharp decline in TV sales. TV demand, particularly for mid- to low-priced units, has declined because of weak purchasing power in the provinces as crop prices decreased while household debts are still high.

TV sales growth was flat in the first quarter this year and fell by 10% in the second and third quarters. Though high-income Thais still have purchasing power and are ready to spend on new 4K TV models, it cannot offset the drop from middle- to low-income segments, he said.

TVs usually generate about 30-35% of overall consumer electrical appliance sales.

Mr Alongkorn said consumers have changed their viewing behaviour, now watching television on computers, mobile phones and tablets.

The number of Thais who only watch television on TVs is declining, he said. More people watch TV and play Line on their tablets or mobile phones simultaneously.

Mr Alongkorn previously forecast sales of consumer electrical appliances in the fourth quarter would improve from the third quarter.

“Consumer electrical appliance sales in October will possibly contract by 15% as consumer sentiment is not good during the mourning period,” he said.

LG sales the first nine months this year grew by 6-7%, beating industry growth as the company introduced many premium products to the market and renovated its flagship shops in Bangkok.

In the fourth quarter, LG does not plan to launch new products. It plans to tone down its marketing and focus on below-the-line activities. The company expects its sales this year will exceed 22 billion baht.

“It’s very difficult to complete sales during this peak season because of consumer uncertainty,” said Mr Alongkorn.

The company believes consumer sentiment will improve in the first quarter next year because of the government’s continuing investment in infrastructure projects.