Lotte Group Chairman Shin Dong-bin, left, examines augmented reality glasses during an investment showcase at Lotte Hotel World in Jamsil, Seoul, Friday, hours before a meeting of group CEOs. Courtesy of Lotte Group

Lotte Group Chairman Shin Dong-bin underscored the importance of innovation in the group's existing businesses during a meeting of CEOs of the group's affiliates, Friday, amid a slowdown in the conglomerate's efforts to transform its business portfolio to be more future-oriented.

According to Lotte Corp., the group's holding company, Lotte held its biannual Value Creation Meeting for the second half of this year. The meeting was attended by more than 80 CEOs, executives and top leaders of Lotte companies, including the chairman.

The group has been holding the meeting as a top decision-making vehicle for discussing managing policies and medium- to long-term strategies.

The holding firm said Friday's meeting focused on exploring plans to improve the competitiveness of its existing businesses to overcome pending uncertainties, as well as reviewing the progress of its new businesses.

"Even in the face of unforeseen crises, it is our responsibility to build a company that overcomes challenges and continues to grow," Shin was quoted as saying. He also urged CEOs to maintain a sense of urgency in achieving business goals and revitalizing the company despite the uncertainties in the business environment.

Lotte Group's logo / Korea Times file

Friday's meeting came amid views that the sluggish performance of Lotte's existing businesses are slowing down efforts to reorient the group's business portfolio with a vision for the future.

For years, Lotte Group has been seeking to expand its presences in bio, health care, mobility, artificial intelligence (AI), platform businesses and advanced materials, but those efforts have yet to stand out among its rivals. The costs to cover the investments required by those emerging businesses are increasing weight on the group's existing cash cows.

Last month, domestic credit rating house Korea Investors Service (KIS) downgraded its outlook ratings of five Lotte companies, including Lotte Corp. and its flagship unit Lotte Chemical, from "stable" to "negative."

"Lotte Chemical's rebound seems to be delayed as it posted operating loss for the past two years," the rating agency said in the report. It added that Lotte Chemical's profitability is also affecting Lotte Corp., which it noted is facing expanded pressure to support its subsidiaries and affiliates as the holding firm of the group.

Retail, another revenue pillar of the group, is also struggling. Lotte Shopping posted an operating profit of 508.4 billion won ($365.7 million) last year, up 31.6 percent year-on-year, but its sales declined by 6 percent to 14.56 trillion won during the same period.

Lotte Group Chairman Shin Dong-bin delivers a welcome speech during the groundbreaking ceremony for Lotte Biologics' plant in Incheon, July 3. Courtesy of Lotte Biologics

Against this backdrop, Shin stressed the need for innovation in the fundamental competitiveness of the group's existing businesses, citing Harvard University professor Clayton Christensen's book, "The Innovator's Dilemma."

The chairman demanded Lotte companies use AI to innovate their responses to market changes. He also stressed the need to expand high-value-added businesses across the group for sustainable growth, citing businesses including contract manufacturing of biopharmaceuticals, electric vehicle battery materials and electric vehicle charging services.

"We have a history and passion for overcoming numerous past crises," Shin said, asking CEOs to strengthen their companies' executive ability in order to facilitate sustainable growth.