LG Electronics Australia has seen a massive 21% slump in revenues, with the Company struggling to lift sales of their OLED TV’s and premium appliances after the business chose to jettison the affordable premium and value market, for a larger share of the premium market for appliances and TVs.
Sales for the last financial year as of December 2023, fell from $1.206 billion to $947M a fall of $259 million or 21% according to their latest financials, filed with the Australian Securities and Investment Commission, with TV sales witnessing a big fall in revenue, due to market conditions and new OLED TV offerings from competitors coupled with rampant discounting.
Former employees who were victims of cost cutting at the Company claim that there is “hardly any division that is performing well”.
In some cases, long term management with essential skill sets relationships with retailers have been replaced with “staff who are cheap to employ”.
Brad Reed who had been with the Company for 19 years was replaced by Poh Lee Koh as marketing manager for IT information display (IT/ID) and business solutions, previously she worked for unknown Company Orbic, who sells $179 4G phones.
The business also appointed Mick Armstrong as head of digital platform marketing. He previously worked for himself for one year after a stint at ‘The Butchers Dog’ and before that Samsung Australia where he was Head Of Digital Platforms.
And despite a significant fall in TV sales Tony Brown was promoted to General Manager of Home Entertainment.
Insiders claim that despite a move to expand their premium product offering the business has not been able to deliver increased profits which slipped from $26.0 Million to $20.6 million as at December 2023.
Marketing Director at LG Electronics Gemma Lemieux, seen right
2024 sales to date are also down “significantly” according to sources. It was only three weeks ago that Marketing Director at LG Electronics Gemma Lemieux, was telling the media “2024 is set to be a massive year for LG”.
She added “In the last eight months, we’ve gone through a global business transformation, setting our sights on becoming a smart life solution company.
“We’ve reinvigorated the brand with a re-focus on our iconic ‘Life’s Good’ tagline and continued to affirm our core message: embracing optimism”.
There was no mention of a major slump in profits and revenue in 2023 or that the business is performing poorly this year.
In 2023 the business paid an increased dividend to LG Electronics Corporation of $35 million Vs a dividend payment in 2022 of $30 million this was despite a fall in both sales and profits.
In related party disclosures LG Electronics Australia Pty Ltd disclosed 34 LG entities that the business purchased goods from including the likes of LG CNS which has a balance of $469M owed to it for services in Australia in 2023 Vs $430M in 2022.
LG CNS describes itself as a ‘Digital Business Innovator who leads client DX excellence in cloud, AI/Big data, smart factory, smart logistics, smart city, blockchain, and other DX technologies.
No explanation as been given as to the work they are conducting in Australia.
LG Australia currently has balances outstanding with a variety of LG subsidiaries including operations in Malaysia USA, Vietnam, Mexico, China.
The purchase of goods “And other services” from LG Electronics in South Korea fell from $932M in 2022 to $676M in 2023.
In total the business has related industry balances outstanding in the tens of millions to a multitude of LG subsidiaries.
In Australia the business moved from Eastern Creek to brand new offices in Parramatta.
Recently the Company selectively, announced a restructure of their local business which despite cuts to their marketing budgets saw the appointment of additional marketing personal.
This came after the business parted Company with long time executive Brad Reed who was heading up marketing for the Enterprise division, he was also responsible for the marketing of their LG Gram notebooks.
Other employees were also axed by the local subsidiary with insiders claiming it was a case of “getting rid of people on high salaries”.
According to insiders the business is struggling to hit targets in 2024 with TV sales and appliances struggling due to inflation issues with consumers cutting back on new products for the home. When they do, they are choosing value and house brand products which LG eliminated from their line up in an effort to chase down sales in the premium market.
In 2023 the business slashed marketing and promotion budgets by $3.8M despite an increase in promotion budget for retailers.
Despite the additional promotional investment, it failed to grow additional sales.
This year LG Australia is facing a new battle with Samsung now selling OLED TVs, which for a long time was the exclusive domain of LG Electronics whose Display division supplies panels to a multitude of TV brands who initially moved to OLED and are now moving back to Micro and Mini LED because of the high cost in the manufacture of OLED panels and the perception that the new technology which is cheaper and equally as good as OLED.
Globally LG Electronics has seen flat net income growth over the past five years.
Recently LG Display reported revenues for the last quarter of US$3.82 billion, this was a decrease on the last quarter 2023 of 19%.
At CES 2024 the business announced smaller OLED panels for TVs however revenue distribution by product category shows that IT device panels, including monitors, laptops, and tablets, made up the largest segment, accounting for 40% of total revenues.
TV panels contributed 22%, while mobile devices and other products accounted for 28%. Automotive panels made up the remaining 10%.
Currently the Company is trying to strengthen its OLED technology offering after being challenged by Chinese manufacturers including TCL who is taking share globally from LG.
The company claims that they are looking to expand their large sized OLED production in an effort to capture a larger share of the premium TV market, while also going after the gaming monitors and other high-value products market.
We have asked LG’s Marketing Director Gemma Lemieux for a comment that we will publish when we get it. In the past she has tried to mislead ChannelNews when we have raised issues relating to terminations at the South Korean Company.
