LG makes quantium business shift and posts record first half Mid East & Africa

LG has revealed a 19% increase in its first-half MEA sales for this year, compared with the same period in 2001. Regional sales turnover for the first six months of this year amounted to US $581.67 million, putting LG well on course to break the sales target of US $1.3 billion by the end of this year.

"Growth is coming from the digital products sector," said Mr M. B. Shin, President, LG Electronics' Middle East & Africa Operations.

Over the past six months, LG has consolidated its regional market-leading standing in the TV, split AC, monitor and optical storage sectors. "All these segments made considerable gains and we remain largely unchallenged," said Shin.

"Regional sales of TVs rose 11% to stand at US $143 million; sales of split air-conditioners and monitors both increased 29%. Split a/c turnover totalled US $148 million, while that of monitors amounted to US $66 million. In the optical storage sector, sales grew a whopping 69% to deliver turnover of US $22 million."

The first-half also saw LG achieve huge growth in the plasma display panel (PDP) sector. "Here regional sales soared by 266% with turnover amounting to US $11 million," said Shin. "Whilst we do not yet have market-leading control over this sector, it will not be long before we do. We have a commanding regional hold on the PDP segment and a revitalised PDP strategy will see us strive to make this technologically-advanced product more affordable at the retail level."

Geographically, first-half sales gains were across the Middle East and Africa with the exception of Turkey, where macro-economic troubles impacted results.

"Our best-selling markets remain Iran, Saudi Arabia and the UAE," said Shin. "Though volumes for Tunisia and Morocco remain small in comparison to other markets, we have seen sales gains in these countries of 92% and 85% respectively, largely due to major investment in marketing in both.

"Only Turkey, Pakistan and Egypt failed to reach their sales targets. However both Pakistan and Egypt have made gains on the same period last year. In the case of Pakistan, we view the minimal 2% increase in sales for the first half as a positive sign that the country is re-stabilising after the impact of September 11."

And in a quantum business shift, the Korean giant has revealed it is to cease OEM product supplies to secondary manufacturers in a bid to boost its brand business.

"To date we have been supplying OEMs in the region. We have decided to pull back from this business because we want to have total control over our valuable brand and better support our regional distribution partners," said Shin. "LG will engage in OEM business only in certain closed markets.

In the first six months of this year, 90% of LG's MEA turnover was from LG-branded products, an increase of 38% on the first half of 2001. "We have made our strategy shift away from OEM supply to transform our organisation from an equipment manufacturer to a brand supplier," explained Shin.

"This fundamental change in business direction underlines our brand strength in the market. This is a core value on which we will build. In future LG will concentrate on value-added, own-brand business. We will compete at the higher-end of the market, leaving others to be pre-occupied with price-sensitivity and brand-diluting promotions.

"We are positioning LG as a premium brand for discerning customers with leading-edge quality products which will enrich our customers lives and in which they can place their complete trust."


Shin also said that 2002 had seen increased activity within its distribution network. "Our partners are solidly committed to our premium brand vision and have clearly demonstrated this with substantial investment in new dedicated showrooms and service centres throughout the UAE, Oman and Saudi Arabia," said Shin.

"The first-half also saw the opening, in Dubai, of the region's only store dedicated to LG's I.T. products, the launch, in Oman, of LG's first mobile service in the Middle East and the introduction, in Qatar, of an LG customer-loyalty privilege card. These initiatives are all in line with our ambition to take the number one slot on customer indices."

LG's regional milestones for the first-half include the launch of new CD-rewrite drives, MP3s, Projection TVs, DVDs and VCR Combis, LCD TVs, 12 new monitor models taking the company into niche markets, the unique dual plasma air purifying split wall-mounted a/c and tele-control a/cs.

"Perhaps the most significant business advances, however, were our entry into the UAE and lower Gulf GSM market and the setting up of a dedicated division to further penetrate the Middle East's rapidly-growing commercial a/c industry.

"Both initiatives are bearing fruit. We have achieved considerable success with our mobile phone business and plan now to be among the leading GSM mobile suppliers in the Middle East and Africa by the end of next year, with a regional sales target of 1 million phones in 2003.

"Highlights within the newly-entered commercial air-conditioning sector include the securing of government agency approval for our product line from both Sharjah and Dubai and the clinching of various contracts for the supply of systems for prestigious projects like the residential Lakes community in Dubai."

Huge marketing investment also brought return-on-investment both in terms of improved sales and heightened brand awareness.

"The past six months have seen LG back music festivals in Oman, Morocco, the UAE and Lebanon. We have also staged the high-profile LG Cup soccer tournament in Casablanca and the next will be staged in Iran this September," said Shin.

Going forward, Shin hinted at major LG infrastructure investment in the region before the end of this year.

"We will see a number of important infrastructure developments," said Shin. "These are needed because over the longer term, we are targeting a 30% year-on-year regional sales growth from the end of 2002 until 2005."