Last year, LG Electronics, which opened the ’80 trillion era’ in annual sales, announced a major portfolio reorganization. This is because despite the highest ever performance, the profitability of all business sectors except the electricity field has fallen significantly, and the cold wave in demand is expected to continue. Along with strengthening the software (SW) capabilities of home appliances and televisions, which are the main products, it is expected to focus on the battlefield, which is the only area of growth.
LG Electronics surpassed 80 trillion won (80.4673 trillion won) in annual sales for the first time last year, but its operating profit fell 12.9% from the previous year. With the exception of the VS division, which recorded an annual surplus for the first time ever, the operating profit of most divisions, such as H&A (-48.8%), AU (-99.5%), and BS (-92.1%) fell in suddenly compared to the previous year. record a serious decline. This is as a result of a sudden slowdown in demand and rising costs of raw materials and logistics.
Expecting that the cold wave in demand will continue until the first half of this year, LG Electronics suggested portfolio development as a strategy to escape sluggishness.
The home appliance and television sectors, which were hit directly by the slowdown in demand, are focusing their efforts on strengthening the software sector. LG Electronics plans to open a new market for smart home appliances by launching ‘UP (up) home appliances’ globally, including in North America, in the first half of the year.
In the TV sector, it is expanding its platform business, starting with its own operating system (OS), ‘webOS’, and accelerating changes in its southwest-focused composition. LG Electronics, which started selling webOS to other TV manufacturers from 2021, secured more than 300 suppliers last year alone. Along with expanding the supply of TV platforms, it plans to aggressively develop advertising business using its own ACR (Automatic Content Recognition) solution.
At the CES 2023 press conference earlier this month, LG Electronics President Cho Joo-wan also said that last year’s TV ad revenue increased more than 10 times compared to 2018, and emphasized the need to move the TV business on from devices to platforms, ads and content.
Expectations are also high for the battlefield business, which was the main contributor to last year’s defense performance. The VS division was the only one of the four business divisions to record an increase in operating profit and the highest sales growth rate (29%). In particular, LG Electronics’ total sales share exceeded 10% for the first time, establishing itself as a leading business.
This year, the company plans to expand its production capacity for electric vehicle drive parts supplied to global automakers, realize economies of scale, and enter a full growth track. As demand for finished cars partially recovers, this year, it aims to surpass 10 trillion won in sales and 100 trillion won in backlog for the first time in history.
Kim Joo-yong, managing director of VS Business Management at LG Electronics, said, “Uncertainty in the business environment, including a decline in demand for cars, will continue this year as well.” Sales growth is likely,” he said.
Meanwhile, LG Electronics announced its environmental, social and governance (ESG) performance and plans for the first time in a business performance conference call on the 27th. The six tasks for implementing ESG management include △ pursuing carbon neutrality and using renewable energy △ establishing a circular economy by recycling waste △ developing products and services with consideration for the environment △ strengthening supply chain ESG risk management △ organizations that growing based on diversity △For everyone The development of convenient products and services was introduced.
As action plans for each task, carbon neutrality was realized by 2030, renewable energy was converted to renewable energy in all business sites by 2050, a total of 600,000 tonnes of recycled plastic was used in product development by 2030, and a 20% reduction in proposed carbon emissions per unit of product use. .
Reporter Jeong Yong-cheol jungyc@etnews.com
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