LG now second most valuable biz group in Korea under Koo's leadership

LG Chairman Koo Kwang-mo.

LG Group under 40 something young leader Koo Kwang-mo has achieved a new growth milestone by becoming Korea’s second largest conglomerate in terms of market capitalization thanks to the stellar performance of its new growth engines especially EV battery business.

As of Wednesday, the combined market cap of LG Group’s listed companies came to 241 trillion won ($201.5 billion), more than two times higher than 93.6 trillion won tallied on June 29, 2018, when the fourth-generation leader took office as chairman following death of his father and former LG Chairman Koo Bon-moo.

Since his inauguration at age 41, LG Group’s asset and revenue have also been swelled by 50 trillion won and 30 trillion won, respectively. LG Electronics, the flagship unit of the conglomerate, surpassed 70 trillion won in sales for the first time last year, while LG Display earned more than 2 trillion won in a dramatic turnaround from years of losses. Its electronics component unit LG Innotek reported 1.26 trillion won in operating profit over sales of 14.94 trillion won last year.

The strong performance of LG Group companies is largely owed to the groupwide business portfolio realignment into three strong pillar businesses of battery, OLED, and automotive electronics under Koo’s leadership that encourages the employees to keep challenging.

[Photo by LG Energy Solution Ltd.]

LG Energy Solution (LGES) established a 50:50 joint venture named Ultium Cells in the United States with GM in 2019. The JV recently announced a plan to build its fourth EV battery plant in the U.S. In October last year, LGES also announced a plan to build a North American EV battery plant with an annual capacity of 40 GWh in partnership with Stellantis. In North America alone, the company’s current and planned investments already exceed 6 trillion won.

LGES, the second largest company in Korea by market cap that hits 119 trillion won, has a potential annual battery production of 1,230GWh, which can power about 1.6 million EVs. This is the world's largest level. The company aims to more than double its production capacity next year.

The group’s automotive electronics business led by LG Electronics is also in limelight for bold M&A and JV deals. LG Electronics made its first business buyout deal since Koo’s inauguration in 2018 by acquiring ZKW, an Austrian automotive lighting company.

In March last year, LG Electronics launched a car infotainment system JV named Alluto with DXC Luxoft, a DXC Technology company headquartered in Switzerland, and in July of the same year, it established an EV powertrain JV named LG Magna e-Powertrain with Canada-based Magna International, the No. 3 global player in the auto parts market, completing its car electronics business with infotainment (VS Division), powertrain (LG Magna), and automotive lamp (ZKW). The solid backlog of LG’s car electronics orders stands at 60 to 70 trillion won. The corresponding figure in its battery business is twice higher.

[Photo by LG Electronics Inc.]

The third pillar that will lead LG Group's future growth is OLED. Since starting large-sized OLED panel business in 2013, LG Display has continued to invest in large OLED panels despite years of losses. With OLED emerging as a mainstream display choice in the premium TV market, LG Display's cumulative panel shipments exceeded 20 million units last year.

“LG before Koo’s inauguration had conducted a deep dive into business fields it is good at, but the current LG throws away even what it has been good at and makes bold M&A moves in what it cannot do well to make it its own,” said Shin Dong-youb, Yonsei University’s business administration professor.

Since Koo took office, not a few business divisions have been jettisoned from LG. The withdrawal of mobile phone business in April last year is a case in point. LG Electronics also sold off its fuel cell and water treatment business. Other business assets chipped off from LG Group include LG Chem’s LCD polarizer, LG Display’s lighting OLED, and LG Uplus’ payment business.

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