LG Electronics (Thailand) Co expects its sales this year to reach 22 billion baht, slightly below an earlier forecast because of weak consumer purchasing power.
Deputy managing director Alongkorn Chujit said the overall electrical appliance industry recorded flat sales growth the first five months this year, down from a 5% growth forecast.
The flat growth came from declining demand for air conditioners, washing machines and TVs. During the peak sales season in March and April, demand for air conditioners fell 5% while washing machine demand was flat and TVs grew only 2-3%.
The three items contribute up to 70% of total sales in the electrical appliance market, which is expected to be worth 70 billion baht this year.
Purchasing power for mid- to low-income people was affected by falling crop prices while white collar workers remain cautious with their spending.
LG expects its first-half sales to grow by 3-4% to 10 billion baht, well below its 8-10% target.
"We saw an improvement in consumer purchasing power since May, particularly for washing machines and TVs," said Mr Alongkorn.
Demand for TVs that connect to the internet is rising, driving consumers to buy second and third TV sets for their households.
He said LG hopes the market improves in the second half after the government speeds up its investment on infrastructure projects.
"These investments should stimulate cash flow in the economy. But we're concerned about the Mers outbreak and how it will affect purchasing power in the short term," said Mr Alongkorn.
Thailand's tourism relies on Chinese visitors, who are sensitive about disease outbreaks. If the tourism industry is affected, related businesses will have lower purchasing power.
"During the first Sars outbreak in 2003, the electrical appliance market temporarily declined as tourism income disappeared," he said.
Nipon Wongsaengarunsri, LG's marketing director, said the company plans to spend 100 million baht to promote LG washing machines in the third quarter.