When Whirlpool Staggered Amid 'Supply Crisis,' LG Electronics Steadily Advanced... On the Verge of Global No.1

LG's Global Home Appliance Annual Sales Likely to Rank 1st... Profitability Already No.1
Minimizing Impact by Strengthening Local Production Systems in North America Amid Logistics Challenges

LG Objet Collection Package

[Asia Economy Reporter Jeong Hyunjin] As the year-end approaches, the semiconductor supply shortage and logistics crisis shaking the world have accelerated the timing of changes in the global home appliance market landscape. While Whirlpool, a U.S. home appliance company with a 110-year history, is struggling with supply chain disruptions, LG Electronics has expanded its business centered on premium home appliances, coming very close to becoming the world's number one in home appliances.

This is not LG Electronics' first attempt to claim the global home appliance number one throne. Since 2017, its operating profit has already surpassed Whirlpool's, and in recent years, it has rapidly closed the sales gap. In 2016, the sales gap between LG Electronics and Whirlpool was nearly 7 trillion KRW, but by 2019, this gap had narrowed to 2 trillion KRW. Last year, LG Electronics' sales exceeded Whirlpool's until the third quarter, but in the fourth quarter, Whirlpool recorded more than 1 trillion KRW in sales compared to LG Electronics, resulting in Whirlpool reclaiming the number one spot on an annual basis.

The factors that caused the contrasting fortunes of LG Electronics and Whirlpool were the semiconductor supply shortage continuing from the first half of the year and the ongoing logistics crisis. Jim Peter, Whirlpool's Chief Financial Officer (CFO), explained in an interview with Bloomberg News that they are experiencing difficulties in procuring semiconductors and some parts, stating, "Shipping routes and ports have been blocked multiple times, and some parts were transported via air routes. When moving products from China to Europe, we used rail transport instead of sea freight."

On the other hand, LG Electronics stated that there are currently no issues with semiconductor and parts supply shortages or logistics problems. An LG Electronics official said, "We are not experiencing production or supply disruptions due to parts shortages. To minimize the impact of logistics issues, we are further strengthening local production systems in key markets such as North America." While prolonged issues could inevitably cause some damage, currently there are no significant problems in product production and supply.

If LG Electronics surpasses Whirlpool in annual sales and ascends to the number one throne, it will hold superiority in both sales and operating profit. In terms of profitability, LG Electronics has already caught up. Whirlpool has driven sales mainly through mid-to-low-priced white goods but with limited profitability. LG Electronics is gradually securing the market by focusing on premium home appliances with high profitability, leveraging its technological prowess. Additionally, the increased 'stay-at-home demand' due to COVID-19 last year and this year has driven strong performance, with space interior appliances like the 'LG Objet Collection,' as well as steam appliances such as dryers, stylers, and dishwashers, maintaining steady popularity. In the first half of this year, LG Electronics' operating profit was 1.5598 trillion KRW, surpassing Whirlpool's 1.53 trillion KRW.

An industry insider said, "As Whirlpool struggles with supply chain management this year, the home appliance market landscape itself is changing," adding, "The fourth-quarter performance of home appliance companies this year depends on how efficiently they operate global supply chains and production lines."