Samsung on track to become top home appliances maker

LAS VEGAS Tue Jan 8, 2013 10:05am IST

People look at Samsung flat screen TVs in Berlin, August 31, 2012. REUTERS/Thomas Peter

People look at Samsung flat screen TVs in Berlin, August 31, 2012.

Credit: Reuters/Thomas Peter

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LAS VEGAS (Reuters) - South Korea's Samsung Electronics Co (005930.KS) said it is on course to achieve its goal of becoming the world's top home appliances maker by 2015, with sales growing an estimated 50 percent by then.

Samsung Electronics, which makes more chips, flat-screens, handsets and TVs than any of its competitors - including the world's best-selling smartphone - is aiming to boost its home appliance segment and narrow the gap with companies including Whirlpool Corp (WHR.N) and Electrolux AB (ELUXb.ST).

"I'm confident of Samsung becoming the world's top appliances maker by 2015 with $18 billion sales, as we set up a very well structured framework for key products and moving step by step to the goal, first starting with fridges," Yoon Boo-keun, president of the division, told Reuters in an interview at the Consumer Electronics Show in Las Vegas on Monday.

Analysts estimate Samsung Electronics earned around 13 trillion won last year from home appliances, part of the firm's consumer electronics arm.

Samsung Electronics would ditch unprofitable product lines and boost research into consumer tastes across different markets, Yoon said.

"It's a business that can ensure steady cash flow with little earnings fluctuation, once you have a proper system in place," Yoon said. "It's not dull at all and has great potential to become Samsung's next earnings driver."

MR TV AIMS FOR GROWTH

Yoon, who was head of Samsung's TV business until 2011, was put in charge of the thin-margin home appliance division a year ago with a mission to match the TV outfit's success.

Known as Mr. TV, he had a pivotal role in ending Japan's more than three decades of leadership in the global TV industry in 2006.

"We see lots of opportunities in the appliances segment but we didn't strongly grow the business - simply, it didn't get proper treatment," Yoon said after unveiling a new four-door Internet-connected fridge at the electronics show.

His remarks come only hours after Samsung Electronics said it likely earned a record quarterly operating profit of $8.3 billion, aided by roaring sales of smartphones.

Samsung's CE division is estimated to have earned around 13 trillion won of revenue in the fourth quarter, or roughly a quarter of its total revenue.

TV sales generally account for around 70 percent of CE performance, and the rest comes from selling appliances such as fridges, ovens and laundry, according to analysts. Samsung does not provide breakdowns.

It's been a low-margin business compared with smartphones, which generate around 25 percent of margin, and the division's operating profit contribution is estimated at around 4 percent.

Yoon also said Samsung, the world's top maker of TVs, was aiming to sell 55 million flat-screen TVs this year, up from 51 million last year, even as the industry is set to remain stagnant due to the weak global economy.

Betting large TVs with over 65-inch screen sizes will lead the growth, Samsung Electronics unveiled three models of ultra high-definition (HD) TVs that boast four times better picture quality than full HD models.

ACQUISITIONS IN MEDICAL SECTOR

Yoon also heads Samsung's corporate design centre and oversees the medical equipment business, which was added to the consumer electronics division this year.

Samsung Electronics acquired a controlling stake in Korean ultrasound equipment firm Medison in 2010 and its affiliate later for around $300 million in total, its biggest ever acquisition in the healthcare industry.

Yoon expected sales from its medical devices would reach $500 million this year, up from $300 million last year, and will grow with the acquisition of companies that make MRI scanners and computed tomography machines.

Samsung Electronics has said it plans to spend 1.2 trillion won in the medical equipment business by 2020 to make it a $10 billion operation by then.

In the long run, Samsung Electronics aims to become a global healthcare leader, taking on GE, Philips, Hitachi, Toshiba and Siemens. (Reporting by Miyoung Kim; Editing by Stephen Coates and Ryan Woo)

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