LG to keep lead in air conditioners.

WorldWide Tech & Science. Francisco De Jesús.

Nho Hwan-yong, left, president of LG’s air conditioning and energy solutions division, poses with, from second left, rhythmic gymnast Son Yeon-jae, actor Cho In-sung and LG Senior Executive Vice President Choi Sang-kyu, during a photo session before unveiling the company’s new models at a Seoul hotel, Wednesday. / Courtesy of LG Electronics.

LG Electronics is aiming to keep its current lead over the rival Samsung Electronics in the air-conditioning business as strenuous effort in selling premium models is paying off, said a company executive Wednesday.

But the company has to tackle growing market uncertainties such as rising costs of materials and a slowdown in growth rates in key emerging economies including China.

Macro-economic and currency moves are the key factors in gauging the profitability of the air-conditioning business because consumers usually cut their spending on home appliances when economies are in trouble.

``LG Electronics is aiming to achieve $10 billion in sales of air conditioners by the end of 2015. It is likely that we will miss our previous targeted date of 2013,’’ said Nho Hwan-yong, the president and chief executive of LG’s air-conditioning and energy solutions division.

Speaking to the media on the sidelines of the introduction of new models for this year held at a Seoul hotel, Nho said last year’s internal business reshuffle had pushed it to delay the timing of the achievement.

LG Electronics lags behind Samsung in TVs and smartphones, however, its home appliances-related businesses are slightly better than its biggest cross-town rival in terms of revenue.

``Economies in developed countries have been slumping and we expect growth rates in some emerging markets to be affected by the economic slowdown the former. But LG should grow our sales by over 10 percent this year as we did last year,’’ he said.

In 2010, sales from LG’s air-conditioning division, which took up around 8.6 percent of its total revenue, were 4.82 trillion won, while its operating profit was at 59.7 billion won, according to company officials.

``We’ve seen the rise of Chinese manufacturers in the sector, which is slightly threatening us. But LG plans to have better product mix-up from large-, medium-, to small-sizes,’’ Nho said.

Despite such economic uncertainties, the company is planning to seek more business chances in the Middle East and China.

``Countries in the Middle East and even China are relatively better compared to developed countries and that gives us the chance to sell more air-conditioners to households and buildings. LG is aiming to promote large-sized models to large construction projects in those countries,’’ Nho told reporters.

LG is expanding its environmentally-friendly brand image by manufacturing highly efficient systems and stopping the use of substances that do not meet its strict environmental standards. 

The company intends to cut carbon dioxide emissions by 28 million tons by developing an array of highly-efficient inverters aimed at Korean, North American and European markets by 2013.

``LG Electronics is seeking to enhance the use of eco-friendly refrigerants from 10 percent to approximately 55 percent of its air conditioners by the end of this year,’’ he said.

Although rival Samsung is ramping up and diversifying its air-conditioner portfolio as ordered by chief executive Choi Gee-sung, Noh is still upbeat about keeping LG’s current lead.

``Samsung is trying hard to give more initiative to design, however, what LG wants is to improve product quality and I can say that’s the difference between us,’’ he said.

``In the domestic market, last year, I believe LG was slightly better than Samsung in terms of market share and revenue,’’ said the executive without elaborating further.

But Nho was tight-lipped over requests by reporters for more details on the rivalry.

``The impact of complaints about Samsung air-conditioners last year was minor for LG,’’ he told reporters.

In July last year, Samsung issued a rare apology over malfunctions of its air-conditioners as consumer complaints escalated its decision to issue a recall.

The company recalled four models sold in Korea between January and June of last year because a software program caused them to malfunction.

It will release its new air-conditioners today and unveil detailed strategies for this year, though it is very unlikely that the newly-named business head Yoon Boo-keun will appear.