LAS VEGAS (Reuters) - Samsung Electronics Co Ltd <005930.KS>, the world's top maker of flat-screen televisions, aims to increase worldwide sales of slimline TVs by 56 percent in 2008 and plans to grow despite a weakening U.S. economy, top executives said on Monday.
By Marie-France Han and Eric Auchard
LAS VEGAS (Reuters) - Samsung Electronics Co Ltd <005930.KS>, the world's top maker of flat-screen televisions, aims to increase worldwide sales of slimline TVs by 56 percent in 2008 and plans to grow despite a weakening U.S. economy, top executives said on Monday.
"The average price fall on LCD television sets should be much slower in 2008, around 20 percent, instead of 30 percent in 2007," Park Jong-Woo, president of the company's digital media division, said during an interview at the Consumer Electronics Show in Las Vegas.
Park said his division was aiming to sell 18 million LCD TV sets and 3 million plasma sets for a total of 21 million flat panel TVs, up 56 percent from the 2007 target of 13.5 million.
!ADVERTISEMENT!Samsung's target is far higher than its own projection of 30 percent growth in the worldwide LCD market in 2008, following a 58 percent surge in 2007.
The flat-screen TV industry posted a series of profitable quarters in 2007 on the back of strong demand for flat panels coupled with a relative shortage situation, a consequence of manufacturers cutting back in investments after a disastrous 2006 marred by oversupply and heavy losses.
The reduced capacity has in turn led to a supply tightness that is expected to persist for another quarter or so.
"We expect the panel shortage to last over the first half of this year," Park said.
Panel makers such as LG.Philips <034220.KS> and Sharp Corp <6753.T> are now racing to build next-generation plants to churn out more panels for bigger TVs - but such extra capacity could result in another supply glut, as early as 2009, analysts say.
Although the company sets ambitious targets for itself, it is also aware of the challenges selling televisions, mobile phones and other electronics into the North American market in the wake of the U.S. housing crisis, another executive told Reuters.
"The market dynamics will definitely change, " said Oh Dong-jin, president of the company's North American operations.
Steep price drops in the consumer electronics sector, most notably flat screen TVs, have been a concern for Samsung, which also makes video and audio equipment, computers and printers.
Samsung competes with Sony Corp <6758.T> and Sharp Corp <6753.T> in LCD TVs and Matsushita Electric Industrial Co Ltd <6752.T> in the plasma TV market.
Global sales at Park's digital media division, totaling 26 trillion won ($27.7 billion) in 2007 according to the company, represent around 30 percent of the company's total sales on a consolidated basis.
In a news release following the interviews, Samsung said the unit would aim to post sales of 30 trillion won in 2008, a 15 percent increase.
Park said the digital media unit posted an operating profit of 1 trillion won in 2007, which corresponds to a margin of about 4 percent for 2007 on a consolidated basis - much stronger than the 8 percent operating loss margin posted in the third quarter on a parent basis.
Meanwhile, North America CEO Oh said his unit posted $22 billion in sales in 2007 and that the company would maintain steady growth despite the weakening economy.
The 2007 North American sales figure is roughly a 16 percent improvement from the $19 billion posted in 2006 and compares with the company's 2007 consolidated sales target of $100 billion.
Oh said Samsung was also aiming to surpass the overall U.S. LCD market forecast, which currently estimates 33 percent growth from about 18 million LCD TV units in 2007 to 24 million in 2008.
A major driver in Samsung's continued strength will be its brand power and the quality of its televisions, Oh said. For instance, more than 80 percent of Samsung's LCD TVs 40 inches and up have "Full High Definition" features, with better image quality than standard LCDs. "Price erosion is inevitable," Oh said. "Growth is one thing. But qualitative things are more a matter of brand building."
Another strong factor for 2008 will be the U.S. Federal Communications Commission-mandated switch from analogue to digital broadcasting in the United States, which is scheduled to take effect in February 2009. Faced with the need to replace their bulky cathode-ray tube TV sets, a majority of consumers will opt to upgrade to flat panels, Oh said.
Samsung shares closed 0.58 percent lower at 516,000 won, compared with the KOSPI's <.KS11> 0.27 percent loss.
(Additional reporting by Kim Yeon-hee in SEOUL)
(Editing by Keiron Henderson)
