LG 2004 Annual Report Download - page 43

LG ELECTRONICS ANNUAL REPORT 2004
042
043
our air-conditioners were first introduced to the
North American market through the "Best Buy"
sales channel. As the LG brand became well
known, and earned popularity among
consumers in 2004, our strongly branded air-
conditioners were a great success. In the future,
LG Electronics will continue to actively
implement premium brand-focused marketing
approaches, further increasing our profitability.
DIGITAL DISPLAY
�The Digital Display Division is focused
on business arenas such as TVs, plasma display
panels (PDP) and monitors. Due to stagnation in
domestic demand, sales figures for digital
display products were lower in 2004 than the
sales in 2003. However, total sales revenue for
the Digital Display Division in 2004 came to KRW
4.98 trillion, up 19% over the previous year.
Increased Export sales in PDPs, LCD monitors
and digital TVs, were the main contributors to
this remarkable business performance. Sales of
our PDP modules surged because of a rapidly
growing market, and a decrease in prices. We
achieved total sales of 800 thousand units in
2004, which was a threefold increase over the
previous year. As a result, our PDP Modules
ranked the No.2 position in the global market.
To satisfy the rapidly growing demand for PDPs,
we started operating a 3rd production line in
April of 2004. This brought our production
capacity up to 140 thousand units per month. In
doing this, we established the largest
production system in the world.
Based on growth in the large-sized flat
screen market, strong efforts were made to
strengthen PDP and LCD TV sales in 2004. This
led to an 11% growth in sales over the year
2003. In particular, we solidified our commercial
and technological bases and diversified our
product lines, in order to effectively respond to
the rapidly expanding digital TV market. In
addition, the key broadcasting technology called
"Enhanced VSB", based on a next-generation
digital TV developed by LG Electronics, was
selected as the standard for terrestrial digital TV
broadcasting in the U.S. With these efforts, LG
Electronics laid the groundwork for springing
forward to become a major force in the global
digital TV market. We also reinforced our
business base in the North American market.
Our PDP TVs and LCD TVs were introduced into
key electronic appliance distribution chains in
the US. This included such major retailers as Best
Buy and Circuit City.
DIGITAL MEDIA
�The Digital Media Division covers such
business areas as optical storage, digital AV, and
PCs. Digital Media product sales in 2004
recorded KRW 3.8 trillion, 7% less than the
previous year. This was mostly due to our
withdrawal from the PC OEM business which
had low profitability. If the sales revenues of the
PC segment are excluded, the Division's actual
sales revenue increased 17% from the previous
year.
Even though the overall revenues went
down, the Digital Media Division generated an
18% growth in the domestic market in 2004.
This notable growth is largely attributable to
enhanced notebook PC sales in the domestic
market. We restructured our PC business by
reducing the low profit margin OEM business,
and implementing an aggressive brand
marketing program for notebook PCs. As a
result, the operating profit margin of the Digital
Media Division was 4.6%, slightly improved
than the previous year's margin.
Our optical storage product lines
gained the top market share in 2004 due to our
DVD Writers topping the market, and the surge
in DVD recorders sales revenue. In the AV
business field, we focused on strengthening the
competitiveness of main product lines such as
DVD recorders. Thanks to these efforts, sales of
AV products in 2004 were 14% greater than the
sales in 2003.
2004
2003
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Sales Contribution
by Division
(%)