Air conditioning companies unlikely to hit sales targets in 2011 because of slow summer

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Firms likely to miss AC sales targets this season

By l Apr 20 2011 , New Delhi

Air-conditioner companies are going through a bad sales patch because of the delay in the onset of summer this year. Companies such as Samsung, LG, Panasonic and Carrier face the prospect of selling a lower number of air-conditioners this year at 3.8 million units against the earlier estimate of about 4.5 million units. The room air-conditioner segment had grown 19 per cent in value terms and 13 per cent in volume terms in 2010-11 primarily driven by split ACs.


The missed targets in all probability will eat into revenues and profit margins. While most of these companies fought shy of admitting any impact of the late summer on their sales and margins, LG has revised downward their sales targets.

“Sales of ACs start from March and peak by April. So far, the summer has not hit a high and this is reflected in our compressor business. Generally, 45 per cent of air-conditioners are sold during April-May. Given the fact th­at April is almost over, we are may not grow more than 8 per cent over 2010 sales. Earlier, we were expecting 35 per cent growth in sales,” national sales head of LG Electronics Amitabh Tiwari told Financial Chronicle.

“This season has certainly been bad for AC sales but weather conditions are similar in other Asian markets too. Our management is aw­are of the slowdown in the compressor business,” he said. LG clocked Rs 2,400 crore from AC sale in 2010.

“The overall AC industry is witnessing a drop of 30 per cent in terms of sales,” said head of sales & marketing of Panasonic India, Suresh Ba­ndi. But he is optimistic that a few good summer days are enough to make up for the lost business. He pointed to similar pleasant weather co­nditions in 2006 that led to sluggish sales in the first part of summer, but saw a pick-up in sales subsequently.

Though not many firms were transparent on their sales numbers, they were unanimous about a near-w­ashout this season. “The se­ason has not picked up even though we are nearing end-April,” said director, marketing & strategy, Carrier India, Krishan Sachdev. “But we are still hopeful and it is too early to comment on sales targets. As we operate in both the residential AC segment and institutional sales, we are able to balance our business,” he said.

Samsung too has witnessed a slowdown in AC sales this year. “Sales have not picked up so far due to the weather conditions. Ho­wever, it is too early to decide anything regarding targets,” said the deputy MD of Samsung, Ravinder Zutshi.

Temperatures in April in Punjab, Haryana and most parts of north-west India have been three to five degrees Celsius below normal. However, the heat has picked up in western and eastern India and also over the central India plains in the last few days, IMD bulletin said on Wednesday.

“The heat will pick up by May. The build-up of snow and La Nina have contributed to higher rainfall and a cooler landscape attracting western disturbances. This would wear off and summer would start peaking soon," director general of IMD Ajit Tyagi said.