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

You are here » Home » My Brands
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.

Mitsubishi Electric Air conditioning announces two new partnerships

Mitsubishi Electric has appointed two new "value added resellers" – Logicool and Intra-grated Solutions – to the network of companies selling its air conditioning and heat pump products.

Mitsubishi Electric sales and marketing director, Deane Flint is confident that the appointment of Logicool Air Conditioning Distribution of South Derbyshire and Peterborough-based Intra-grated Solutions will enhance the company's offering to customers.

"Our sales have gone from strength to strength in what has been a tough time for the construction industry and we put this down to our desire to deliver what customers want," he said. "These new partnerships extend our ability to reach even more of the market."

Logicool and Intra-grated Solutions, join Hemel-based PACAIR as official resellers of Mitsubishi Electric products, with the company retaining the services of wholesalers, Kooltech and Dean & Wood, and its own nationwide sales network.

Intra-grated Solutions is managed by Dave Sheldon, a chartered building services engineer with 30 years in energy management and design, who leads a team specialising in 'green' technology. The company also acts as a distributor for LG.

Logicool was formed in 2008 by Karl Richardson as a specialist supplier of air conditioning products. They also distribute Hitachi and Samsung products.

Logicool expansion

In a separate move, Logicool has appointed Steve Glover as business development manager specifically to generate sales on the south coast and also to provide support and advice to the business as it continues to grow at a rapid pace.

Best known for his Dorset-based company The Air Conditioning Agency, Steve joined Logicool at the beginning of the year.

"Steve has already hit the ground running and taken some good orders,” said Karl Richardson.

“In addition he has implemented some procedures and ideas here which will ease our progression and ensure that we do not lose our personal and professional touch as we grow. I am delighted that he has joined and he definitely brings a big personality as well as lots of experience."