LG Electronics to focus on platform, B2B, future industries: CEO

LG Electronics Inc. Chief Executive Officer Cho Joo-wan explains LG Electronics’ future business strategy at LG Science Park in Magok, Seoul, on July 12. [Photo proivded by LG Electronics]

South Korea’s LG Electronics Inc. will reorganize its business portfolio to achieve 100 trillion won ($78.5 billion) in sales by 2030, said its Chief Executive Officer Cho Joo-wan on Wednesday.

“The electronic devices business (for automobiles) has become LG Electronics’ main business with annual sales of 10 trillion won,” Cho said, noting that the achievement was possible through 10 years of challenge. “We will not settle for the present.”

Cho, marking 551 days in office, added that LG Electronics will transform into a company that generates 100 trillion won in sales by 2030 through a reform in business portfolio.

Cho’s remarks were made during a press conference at LG Science Park in Seoul on Wednesday. The media event was attended by key executives, including Lee Sam-soo, vice president and chief digital officer, Lyu Jae-cheol, head of the home appliance and air solution business, Park Hyun-se, head of home entertainment business, Eun Seok-hyun, head of the vehicle component solutions business, and Jang Ik-hwan, head of the business solutions division.

“LG Electronics, from now on, will not just be the top home appliance brand that produces good products but it will continue to challenge and transform into a smart life solution company that connects and expands customers’ various spaces and experiences,” Cho said.

The CEO presented the goal of achieving an annual average growth and operating margin exceeding 7 percent and seven times more corporate value by 2030.

Cho shared the plan to achieve 100 trillion won in sales by 2030, up from 65 trillion won last year, excluding those of LG Innotek Co.

As part of efforts to achieve transformation in business portfolio and qualitative growth, LG Electronics plans to invest more than 50 trillion won by 2030, including more than 25 trillion won in research and development, more than 17 trillion won in facility investment, and 7 trillion won in strategic investment.

LG Electronics Chief Executive Officer Cho Joo-wan announces corporate visions and business strategies at a press conference held at LG Science Park, Seoul on July 12. [Photo by Yonhap]

LG Electronics set the three major growth engines as non-hardware, business-to-business, and new business areas. The company plans to increase the share of these three pillars to more than 50 percent in sales and operating profit by 2030.

As for the non-hardware business model, LG Electronics introduced a recurring model that adds non-hardware businesses such as content and services, subscriptions, and solutions to the hardware-focused businesses where sales and profit are generated at the time of sale for steady generation of profit.

LG Electronics plans to invest more than 1 trillion won over five years to enhance the competitiveness of LG Channels, an advertising-based free broadcasting channel.

The company plans to expand the web operating system platform to other TV brands and apply the system to other categories other than TVs.

LG Electronics will also accelerate transformation in the home appliance sector to one that is based on services. It plans to boost Home as a Service (HaaS) that integrates subscriptions and smart homes.

LG Electronics will also expand its home appliance rental and care services, which saw more than 30 percent increase in annual average sales growth in the last five years.

When it comes to B2B business, LG Electronics plans to expand automotive electronics devices business that generates stable profit.

Cho said that the company will double the sales of electronics devices business by 2030 to 20 trillion won and become one of the world’s top 10 players.

Last year, the electronics devices business achieved 8.6 trillion won in sales.

“We will expand the know-how accumulated over the past 65 years from the existing home-centered business to commercial and mobility areas and virtual spaces,” Cho said.

In new growth engines, LG Electronics will set eyes on the digital and healthcare sector based on strategic investment, electric vehicle battery charging business, and metaverse.

Brokerages, in the meantime, have raised the target stock price of LG Electronics to up to 160,000 won, on growing expectations that its earnings will hit an all-time high for the second quarter.

Shares of LG Electronics closed 1.43 percent higher at 120,200 won on Wednesday.