|An LG Electronics next-generation infotainment system is seen installed in Renault Group's new electric vehicle model, Megane E-Tech. Courtesy of LG Electronics|
By Kim Hyun-bin
LG Group Chairman Koo Kwang-mo has drastically transformed Korea's fourth-largest business group into a conglomerate focusing on future growth engines by dropping unprofitable businesses, according to industry watchers, Tuesday.
Koo will mark his fourth anniversary Wednesday since he took over management of LG Group in June 29, 2018. Under Koo's leadership, LG has withdrawn from its ailing smartphones and solar power businesses and aggressively invested in future growth businesses such as electric vehicle (EV) batteries and artificial intelligence (AI).
"We focused on enhancing the intrinsic competitiveness of our business and laying the foundations for qualitative growth, focusing on 'customer value management.' We upgraded our business portfolio by reorganizing our business and concentrating our capabilities on growth businesses," Koo said during the 60th regular general shareholders' meeting of LG Corp. on March 29.
According to the electronic disclosure of the Financial Supervisory Service (FSS), Tuesday, LG Group's assets and sales last year stood at 167.5 trillion won ($130.2 billion) and 147.62 trillion won, respectively, up 36.1 percent and 15.4 percent from 2017, the year before Koo took office.
One of the biggest transformations of the LG Group after Koo took office was the group's withdrawal from the smartphone business.
|LG Group Chairman Koo Kwang-mo|
Chairman Koo officially ended the mobile phone business, which had been running since 1995, in July of last year. He thought that it was the right move to close down the business, which was in the red with no growth potential.
The solar cell and module business was also withdrawn this year. LG Electronics, which started the solar panel business in 2010, has struggled with increasing sales of low-priced Chinese products and rising raw material costs. Sales of 1.1 trillion won in 2019 decreased to 800 billion won in 2020, and the global market share remained at 1 percent.
"The sudden suspension of the solar power business following the smartphone business last year means that the business portfolio has been made more efficient." Kim Ji-san, a researcher at Kiwoom Securities, analyzed at the time.
Last year, the company launched LG Magna e-Powertrain, an EV ecosystem with LG Electronics holding a 51-percent stake and Magna 49 percent in a joint venture.
It was created through the LG Energy Solution (LGES) battery business. To strengthen its business, the company plans to inject more than 10 trillion won ($7.77 billion) into batteries and materials development over the next five years.
It is also focusing on securing artificial intelligence (AI) and big data technologies, which are the foundations of the era of the Fourth Industrial Revolution.