LG Electronics spurs portfolio revamp under Vision 2030

CEO confident about nurturing new businesses with sales over W1 tril.

LG Electronics CEO Cho Joo-wan said Wednesday that the company is successfully growing new businesses, posting more than 1 trillion won ($751.7 million) in sales.

Cho believes these businesses will serve as key growth drivers supporting the Vision 2030 strategy, which focuses on revamping the company’s business portfolio.

During an investor forum at LG Science Park in western Seoul, Cho shared the progress and achievements of the company’s mid-to-long-term plan as part of its commitment to directly and transparently communicate with the market.

Along with Cho, the company’s chief financial officer, Kim Chang-tae, and other executives of the company’s top brass attended the event.

Vision 2030 aims to transform itself from an electronics device maker to “a smart life solution company,” providing customer experiences across various spaces, including home, commercial environments, mobility and virtual spaces.

Under the strategy, the company promised to achieve a 7 percent in compound annual growth rate, a 7 percent operating profit margin and a seven-fold growth in enterprise multiple, an indicator showing a company’s corporate value.

LG Electronics said the company has been cruising toward the goal, posting an 8 percent year-on-year growth in its sales during the first half of this year. During the same period, its operating profit margin stood at 6 percent, and enterprise multiple grew fourfold.

“I am proud to say that we have been steadily laying the groundwork to achieve our future vision over the past year, and we are now creating structural changes and sustainable outcomes in various business fields,” Cho said.

“With strong confidence and a sense of responsibility, we will continue to push forward consistently and vigorously to reach our goals.”

LG Electronics' OLED evo G4 TV / Courtesy of LG Electronics

As part of the vision, LG Electronics will revamp its portfolio to maximize the growth potential of its existing business, nurture platform-based service, accelerate business-to-business (B2B) operations and explore new business fields.

Among existing businesses, Cho noted that the company’s home appliance businesses are showing a stable growth trajectory despite the backpedaling of Korea’s home appliance market as the company expanded direct-to-customer selling strategies.

In terms of B2B operations LG Electronics said it has achieved significant progress in sectors such as automotive parts, HVAC, or heating, ventilation and air conditioning, and smart factories by capitalizing on the market transition toward digitalization and electrification.

The company’s B2B segment accounted for 27 percent of its sales in 2021 and increased to 35 percent in the first half of this year. The company aims to increase the B2B segment’s share of its total revenue to 45 percent by 2030.

Highlighting the forum was the company’s strategy to nurture what it calls “unicorn businesses” which post more than 1 trillion won in annual sales.

“As the venture capital industry calls a startup company valued at over $1 billion as a unicorn company, LG Electronics is calling a business model which generates more than 1 trillion won in sales as a unicorn business,” Cho said.

“Among our businesses, home appliance subscription has already become a unicorn business, and there are other prominent seed businesses which are expected to be described as unicorn in the near future.”

LG Electronics’ home appliance business posted 1.13 trillion won of revenue last year, up 33 percent from a year earlier. As a growing number of customers opt for home appliance subscription services to save costs and use new appliances as long as they want, the company expects that the number will grow to 1.8 trillion won at the end of this year, up 60 percent from last year.

Another potential unicorn is the webOS-based advertisement and content business. WebOS refers to LG’s multitasking operating system for smart devices such as smart TVs.

Since LG Electronics has sold more than 220 million smart TVs in the past 10 years, the company believes those TVs will be a powerful and lucrative platform. The company projects that the revenue from this business will likely surpass 1 trillion won by the end of this year, showing a four-fold growth compared to that of 2021.

The company also said its HVAC business will likely gain unicorn status within three years, buoyed by growing demands for chillers for artificial intelligence data centers.

A chiller is a system to air-condition large buildings and facilities by using chilled water. LG Electronics said its chiller business logged an annual growth rate of over 15 percent in the past three years, with overseas sales more than doubling during the same period.

“These goals are becoming reality very fast,” Cho said. “By pursuing a portfolio that can ensure scalability and profitability, we will continue making efforts to make the company’s proper value recognized in the market.”

Related Posts

Samsung SDI showcases next-generation batteries at IAA Transportation 2024

CEO vows to continue supplying top-quality, safety-ensured batteries through close collaboration with customers By Kang Seung-woo Samsung SDI is showcasing its lineup of next-generation batteries optimized for electric commercial vehicles…

Samsung in urgent need of boosting foundry yield for AI processors

Nvidia CEO hints at switching suppliers from TSMC By Nam Hyun-woo Samsung Electronics faces an urgent need to enhance its foundry manufacturing yield for artificial intelligence (AI) processors as Nvidia…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

Jeju Air Tragedy: Worst Korean Aviation Disaster Since 1997

Jeju Air Tragedy: Worst Korean Aviation Disaster Since 1997

Racism and Misogyny: The Troubling Workplace Culture at Shangri-La Hotels

Racism and Misogyny: The Troubling Workplace Culture at Shangri-La Hotels

Instagram, under pressure, tightens protection for teens

Instagram, under pressure, tightens protection for teens

Samsung SDI showcases next-generation batteries at IAA Transportation 2024

Samsung SDI showcases next-generation batteries at IAA Transportation 2024