IT slowdown leads Toshiba to slash sales targets

Toshiba Thailand Co announced it had cut its annual sales growth projection target by half because sales of information technology (IT) products grew by just five percent in the first half of this year, well down on Toshiba’s 10 percent projection for the same period.

The reduced figures for electrical appliance purchases reflected the general impact higher household debt appears to be having on the overall marketplace. Senior management at Toshiba said they could not see any signs of a major improvement into the second half of this year and therefore felt compelled to announce the severe cut in projected sales.

Yet it wasn’t all doom and gloom for Toshiba. While electrical appliance sales dropped to represent a mere five percent of Toshiba’s revenues, down from a previous high of 30 percent, sales of home appliances, audio-visuals and kitchen products were very strong and accounted for 95 percent of Toshiba’s returns. This was up from a previous high of 70 percent, a figure achieved in 2012.

Part of the reason as to why this area of their business has seen such growth may be due to the economic slowdown which means many people spend a lot more time in their residences and so choose to spend what disposable income they have available to them in and on their homes.

Toshiba management said the company plans to continue to roll out new products under what they term ‘the concept of convenience’ and quality of lifestyle. These buzz-phrases basically refer to the company marketing such products as refrigerators, washing machines, vacuum cleaners, air conditioners, microwave ovens and TVs.

Toshiba executives believe the average consumer is looking for products which will make their lives easier but sold at a value price. The company said it would not engage in a price war with other major retailers and producers which would ultimately prove to be unsustainable for growth over the longer term.

Toshiba says it has revised its overall marketing strategy by focusing more on local dealers and giving them more incentives. Given that local dealers represent some 60 percent of Toshiba’s returns this appears to be a sensible policy. The rest of Toshiba’s earnings come from modern trade.

The company said the severe drought situation which afflicted a number of provinces with the delayed monsoon season had not affected operations at Toshiba’s four factories. Toshiba said it can deal with restricted water supplies because it is geared to use reverse osmosis technology to treat wastewater and this means it is less reliant on being able to access mains supplies.