When LG Electronics made the surprising move two years ago by unceremoniously exiting one of its core businesses, the mobile phone business, investors wondered what its next growth engine would be.
It didn't take long for the South Korean electronics giant to find an answer.
The company announced a new business strategy on Wednesday. It's a transformation from a traditional consumer electronics manufacturer to a platform-based technology giant.
CEO Cho Joo-wan said that with new business goals, LG aims to achieve annual sales of 100 trillion won ($77.5 billion) by 2030, which will increase from 65 trillion won in 2022. He said it would be a significant increase from 1 trillion won.
LG announced that it will invest 50 trillion won by 2030, including more than 25 trillion won in research and development projects and more than 17 trillion won in infrastructure development, in order to drastically change its business portfolio and pursue “qualitative” growth. .
“We are not satisfied with just making good home appliances,” Cho said at a press conference at LG Science Park, the company's research center, to transform into a smart life solution provider that leads to a variety of consumer experiences. He said he was taking a bold step.
The CEO said that under Vision 2030, LG will focus on three growth drivers: increasing sales of non-hardware products, promoting business-to-business (B2B) models, and exploring new growth areas such as electric vehicle charging and digital health. He said he would pursue it.
He said the three divisions will account for more than half of LG's annual sales and operating profit by 2030.
Reinventing the way LG works and communicates
“We are establishing a completely new LG by reinventing the way we work and communicate,” said the CEO, known in the West by his English name William Cho.
LG announced that it will invest more than 1 trillion won over the next five years to strengthen content competitiveness and promote the growth of LG Channel, an advertising-based free-to-air platform.
With this investment, LG plans to strengthen its service platform through media subscriptions and rentals and generate recurring profits.
The company entered the TV content platform market in 2021 with its proprietary webOS software for smart TVs.
The number of LG Channel users increased from 20 million people in 25 countries last year to 48 million people in 29 countries.
In the B2B field, the company aims to achieve annual sales of 40 trillion won by 2030.
One of the key areas that LG has cultivated in recent years is its auto parts business.
The company plans to double its sales to 20 trillion won by 2030 and become one of the world's top 10 auto parts manufacturers.
The order backlog of LG's auto parts division is expected to reach 100 trillion won by the end of this year.
Triple 7: LG's 2030 Financial Goals
LG plans to strengthen its digital healthcare business centered on its North American Innovation Center as a future growth driver.
To expand its presence in the EV charging business, LG recently announced four charging systems through its affiliate HiEV Charger, which it acquired last year.
LG plans to expand its EV charging business to Europe and other Asian countries next year.
An LG executive said, “We will actively explore M&A and joint ventures for our company's inorganic growth.''
He said that if everything goes as planned under Vision 2030, LG will have achieved an average annual sales and operating profit growth rate of 7% and a seven-fold increase in corporate value by then. It was called the “Triple 7” goal.
Write destination Ye-Rin Choi and Ik-Hwan Kim at rambutan@hankyung.com
In-Soo Nam edited this article.
