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Panasonic, LG Set Aggressive Goals for Flatscreen TV Sales

Posted on: Friday, 9 January 2009, 14:55 CST

Panasonic Corp. said Friday it seeks to increase sales of its flatscreen TVs by 50 percent, joining competitor LG Electronics in establishing aggressive growth targets despite the slowing economy.

The company, which changed its name from Matsushita Electric last year,  said it will increase its product line-up and expand sales channels to reach its goal of selling 15.5 million plasma and liquid crystal display (LCD) TVs in the year beginning in April.  

The target is a sharp increase from the estimated 2008/09 sales of 10.3 million.  If the company achieves its goal, Panasonic would be well ahead of estimated market growth. The bold sales targets coincide with Panasonic’s plans to reduce investments on two new flat-screen TV plants by about $1.5 billion by 2012.

The world's largest plasma TV maker echoed bold projections announced earlier on Friday by LG, which said it aims to increase its LCD TV sales, by 50 percent to 18 million sets this year and its plasma TV sales by 7 to 25 percent to between 3 and 3.5 million. LG is currently ranks third in the world in LCD TV sales.  However, analysts have called LG's targets unrealistic.

Samsung, the top rated seller of LCD TVs and the No. 2 maker of plasma TVs, provided a more restrained forecast of 26 million flat-screen TVs to be sold in 2009, according to a Yonhap News report Thursday.  If achieved, that would represent a 10 percent growth for LCD TVs and 33 percent growth for plasma over last year.

Industry research firm DisplaySearch predicted that the LCD TV market would grow 17 percent in 2009, down from a 29 percent increase in 2008.  It also forecasts plasma TV growth of just 5 percent in 2009, a modest number when compared with the 24 percent rise seen in 2008.

Slowing economies throughout the world have been eroding demand for flat TVs, digital cameras and other electronics products.  Indeed, Japan’s top electronics maker, Hitachi Ltd., is expecting to miss its LCD TV sales target by as much as 10 percent in 2008/09.

On Friday, Japan's Tokyo Electron Ltd . reported that orders for its tools to make flat panel displays and solar panels had plummeted 98 percent to 500 million yen during the last quarter of 2008.  The company is also the world's No.2 supplier of equipment used to make semiconductors.  Its total orders fell 65 percent to 37.5 billion yen.

Panasonic had reduced its net profit forecast by 90 percent in November, and said it would restructure to sustain itself during a downturn that has already forced Sony Corp and other rivals to suspend operations and eliminate jobs.

On Friday, the company said it would be difficult to achieve all of its targets under its mid-term plan, and that it would cut investments on flat TV plants under construction in Hyogo prefecture by 23 percent.

"We will aim for a bigger growth than the (flatscreen) industry as we cope with a slowdown in the market," said president Fumio Ohtsubo in a briefing.

"We hope to win the cut-throat competition ... We will not consider the planned cut in investment as a negative move."

Profit margins on TVs are also falling under pressure, along with slowing demand, with prices plunging as makers and retailers try to reduce mounting inventories.

"Panasonic is trying to step on both the accelerator and the brake at the same time," Mizuho Securities analyst Ryosuke Katsura told Reuters.
"It is pushing hard to gain market share at the same time that it trims down, most likely by consolidating its factories around the world.

"The strategy it is mapping is one aimed at springing back to growth when the economy does recover. But that's not going to be visible any time soon."

Katsura warned that Panasonic could experience a net loss next business year, a stark reversal of the 30 billion yen in profit the company expects in 2008/09.

Other analysts were also skeptical of LG's new targets.

"LG's target is unrealistic under current market conditions. U.S. consumers are buying digital signal converters (for their analog televisions) instead of new TVs, even with huge discounts," HI Investment & Securities analyst Park Sang-hyun told Reuters.


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Source: redOrbit staff

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