‘LG is leader’ in home appliances for 4 consecutive years…TV leadership to be in battle
Kim Eun | silverkim@ | 2017-11-13 10:04:54
[Digital Times, Kim Eun] Samsung Electronics is expected to overtake Samsung Electronics for the fourth consecutive year since LG Electronics outperformed Samsung Electronics in operating margin in 2014. Especially, LGE`s OP margins are approaching 10% this year, and the operating margins of the two companies are on the rise, reaching three times that of Samsung Electronics.
According to industry sources, the operating margin of LG Electronics` H & A division, which handles white goods such as air conditioners and refrigerators, and the HE division, which handles TVs and audio, accounted for 9.2% In the same period, the operating margin of the consumer electronics (CE) division of Samsung Electronics was 3.9%, which is less than half of LG Electronics.
LG Electronics `and Samsung Electronics` home appliances OP margin has widened every year for the past four years. In 2013, LG Electronics and Samsung Electronics saw their operating margin of 2.6% and 3.3%, respectively, ahead of Samsung Electronics by 0.7%. However, after 3.1 % in 2014 and 2.4 % in Samsung Electronics, LG Electronics posted 3.1 % and 2.7 % in 2015 and 7.4 % and 5.6 % respectively in 2016 and 2016, respectively. In the first quarter of this year, LG Electronics posted a 10% operating profit margin in the global home appliance industry, while Samsung Electronics gained 3.7% and more than doubled. In the second quarter of this year, LG Electronics recorded 8.5% and Samsung Electronics recorded 2.9%. Overall, LG Electronics is expected to post a 9% OP margin and Samsung Electronics (SEC) 3% OP margin.
The gap between the two companies` OP margins has largely been a result of the missteps in the TV business. LG Electronics launched OLED (Organic Light Emitting Diode) TVs for the first time in the world in 2013, pushing OLEDs to the next generation TVs that connect LCD TVs. Since last year, major TV manufacturers such as Japan and Europe have joined the OLED TV camp, and OLED TV sales have started to surge.
Samsung Electronics, on the other hand, introduced QLED TV, which improved the picture quality by adding quantum dot (QD) film material to LCDs, to the top of existing LCD TVs, but had difficulty securing market dominance. As this situation continues, Samsung Electronics recently sees the president of Samsung Electronics, who is considered to be the display artisan at the head of the household appliances division, and is aiming for a reversal.
The reason LG Electronics raised the operating margin of household appliances is thanks to the promotion of premium product sales strategy and productivity improvement in addition to OLED TVs four years ago. We also succeeded in developing new markets such as styler, dryer and rental business.
Meanwhile, LG Electronics` 9% OP margin is overwhelmingly higher than that of global electronics companies such as Whirlpool (6.1%) and Electrolux (6.7%).
An industry expert pointed out, "The difference between the two companies` premium TV strategies has been lost in the global TV market due to the slowdown in growth for many years." If LG Electronics has a clear advantage in the next generation TV market with OLED TV, The gap in the operating profit of the home appliances will be bigger."
By Kim Eun silverkim@
[ copyright ⓒ The Digitaltimes ]
According to industry sources, the operating margin of LG Electronics` H & A division, which handles white goods such as air conditioners and refrigerators, and the HE division, which handles TVs and audio, accounted for 9.2% In the same period, the operating margin of the consumer electronics (CE) division of Samsung Electronics was 3.9%, which is less than half of LG Electronics.
LG Electronics `and Samsung Electronics` home appliances OP margin has widened every year for the past four years. In 2013, LG Electronics and Samsung Electronics saw their operating margin of 2.6% and 3.3%, respectively, ahead of Samsung Electronics by 0.7%. However, after 3.1 % in 2014 and 2.4 % in Samsung Electronics, LG Electronics posted 3.1 % and 2.7 % in 2015 and 7.4 % and 5.6 % respectively in 2016 and 2016, respectively. In the first quarter of this year, LG Electronics posted a 10% operating profit margin in the global home appliance industry, while Samsung Electronics gained 3.7% and more than doubled. In the second quarter of this year, LG Electronics recorded 8.5% and Samsung Electronics recorded 2.9%. Overall, LG Electronics is expected to post a 9% OP margin and Samsung Electronics (SEC) 3% OP margin.
The gap between the two companies` OP margins has largely been a result of the missteps in the TV business. LG Electronics launched OLED (Organic Light Emitting Diode) TVs for the first time in the world in 2013, pushing OLEDs to the next generation TVs that connect LCD TVs. Since last year, major TV manufacturers such as Japan and Europe have joined the OLED TV camp, and OLED TV sales have started to surge.
Samsung Electronics, on the other hand, introduced QLED TV, which improved the picture quality by adding quantum dot (QD) film material to LCDs, to the top of existing LCD TVs, but had difficulty securing market dominance. As this situation continues, Samsung Electronics recently sees the president of Samsung Electronics, who is considered to be the display artisan at the head of the household appliances division, and is aiming for a reversal.
The reason LG Electronics raised the operating margin of household appliances is thanks to the promotion of premium product sales strategy and productivity improvement in addition to OLED TVs four years ago. We also succeeded in developing new markets such as styler, dryer and rental business.
Meanwhile, LG Electronics` 9% OP margin is overwhelmingly higher than that of global electronics companies such as Whirlpool (6.1%) and Electrolux (6.7%).
An industry expert pointed out, "The difference between the two companies` premium TV strategies has been lost in the global TV market due to the slowdown in growth for many years." If LG Electronics has a clear advantage in the next generation TV market with OLED TV, The gap in the operating profit of the home appliances will be bigger."
By Kim Eun silverkim@