LG CORP IN CONSUMER APPLIANCES (WORLD) July 2012 Euromonitor InternationalPASSPORT 2CONSUMER APPLIANCES: LG CORP Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised. LG has a wide geographic presence in consumer appliances and is particularly strong in home laundry and in refrigeration. The company has looked increasingly to emerging markets, particularly India where it is the leader in major appliances. The company has enjoyed strong growth in the US market over the review period 2006-2011 and in doing so, raised the ire of market leader in major appliances, Whirlpool, which brought a dumping case against LG by the ITC, which was struck down in 2012. Scope SCOPE OF THE REPORT All data expressed in retail volume (000 units). Major Appliances 446,781 Dishwashers 19,286 Small Appliances 1,724,551 Note: Retail volumes in 2011 Refrigeration Appliances 143,240 Home Laundry 120,401 Microwaves 60,731 Large Cooking Appliances 103,123 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS Euromonitor InternationalPASSPORT 4CONSUMER APPLIANCES: LG CORP LG is South Koreas second largest conglomerate (or chaebol) behind Samsung involved in electronics, chemicals and telecommunications. LG Electronics is an affiliated company of LG Corp and has four divisions, including Home Appliances which produces a range of products including large cooking appliances, refrigeration, home laundry, vacuums, small cooking appliances, microwaves and dishwashers. LG Electronics controls 114 local subsidiaries worldwide, employing roughly 82,000 people. LG Electronics other divisions include Home Entertainment, Mobile Communications and Air Conditioning and Energy Solutions. Home Appliances made up 19% of net sales in 2010 and 22% in 2011. LG has struggled against fellow chaebol Samsung whose aggressive new product development and marketing have eroded LGs market share in smartphones and falling television prices have eroded its margin. Meanwhile, LG sales in its consumer appliance-related divisions have seen good growth in financial year 2011 both in Air Conditioning and Energy Solutions and in Home Appliances giving the company some reason for optimism. LG Corp Headquarters:Seoul, South Korea Regional involvement: Global Category involvement: Refrigeration appliances, home laundry appliances, dishwashers, large cooking appliances, microwaves, vacuum cleaners, air treatment products, small cooking appliances World consumer appliances volume share 2011: 1.5% Volume growth 2010-2011: 6.8% LG another South Korean leader STRATEGIC EVALUATION Euromonitor InternationalPASSPORT 5CONSUMER APPLIANCES: LG CORP In 2011, net sales fell by 3% over 2010 dragged down by LGs handset sales and Home Entertainment products consisting mainly of televisions. Home Appliances showed robust growth increasing by 7%. Meanwhile Air Conditioning and Energy Solutions also showed strong growth of nearly 13% over 2010. Hitting LG in handset sales was strong competition from low-cost Chinese rivals including HTC, and Samsung. In its domestic market, LG recorded 7% growth over Q4 2010 due to demand for larger capacity and energy-efficient appliances. In overseas markets LG has reported economic slowdowns in China and Europe, but reported growth in the US and emerging markets towards the end of 2011. Korean sales helped to buoy demand for LGs air conditioners with sales rising by 7% in the fourth quarter of 2011. However, unseasonable cold temperatures adversely impacted air conditioner sales in some emerging markets, notably India. LG boosted by home appliances and air conditioning STRATEGIC EVALUATION Euromonitor InternationalPASSPORT 6CONSUMER APPLIANCES: LG CORP First quarter 2012 sales weakened across all of LGs four divisions with the strongest declines taking place in Home Entertainment and in handsets. Home Appliances sales fell by almost 3% over the same period in 2011 while Air Conditioning and Energy Solutions sales fell by just over 1%. However, it was the largest division, Home Entertainment, and the 7% decline in sales that had the strongest impact on top line results. Despite a weak performance in sales, LG still returned to profitability due in part to strong sales of its 3D TVs and internet-connected TVs, which enjoyed an operating profit margin of 4.1% helping to boost profitability overall. In Mobile Communications, shipments decreased by 22% and revenue fell by 10%. Smartphone shipments however were strong, driven by sales of LGs Optimus range. In Home Appliances, while sales