LG Electronics expects home appliance growth

SEOUL (Reuters) - South Korea's LG Electronics is targeting a 20 percent increase in sales at its home appliances unit next year and aims to nearly double its air-con sales by 2007, a senior executive said on Thursday.

LG plans to raise output from its overseas plants to offset the impact of a firmer won currency, Lee Young-ha, chief executive of the firm's home appliances unit, told reporters.

"The stronger won and raw material shortage due to high demand from China and India pose threats to our profitability," Lee said. "Focusing on high-end products is the only way to survive."

LG, the world's top maker of air conditioners, is targeting annual air-con sales of US$5.2 billion in 2007 and US$7 billion in 2010, against US$2.8 billion estimated for 2005.

Lee also said the company aimed to raise its overall home appliances sales by 20 percent in 2006 from about US$10 billion expected for 2005.

The unit is targeting an operating margin of about 8 percent next year versus seven percent this year, Lee added.

LG is the world's number three producer of household appliances in revenue terms, behind Sweden's Electrolux and Whirlpool of the United States.

The home appliances division contributes about a quarter of the revenue of LG Electronics.

Shares in LG Electronics fell 0.98 percent to 70,400 won by 0343 GMT, outperforming the wider market's 1.73 percent fall.