Amid LG Electronics' anticipation of setting new performance records in 2023, President Cho Joo-wan has expedited the South Korea-based company's "Triple 7" target by two years. As a crucial aspect of this strategic shift, LG is set to reevaluate its portfolio of 54 businesses, directing future investments towards core operations to bolster overall business profitability.
Originally slated for 2030, "Triple 7" outlines ambitious goals, including a 7% annual growth rate, a 7% operating profit margin, and an enterprise value (EBITDA) of 7 times, all grounded in structural innovation and sustained quality growth. The revenue target for this period is an ambitious KRW 100 trillion (US$770 million).
Sources from The Korea Economic Daily reveal that Cho shared this accelerated timeline during a recent "CEO F.U.N. Talk" employee communication event. Initially slated for realization by 2030, the "Triple 7" plan is now targeted for completion by 2028. The swift achievement of these objectives is expected through strategic portfolio adjustments and the enhancement of B2B initiatives.
Upon entering 2023, LG Electronics actively restructured its business portfolio and strengthened supply chain management, laying the foundation for a potentially historic financial performance. By the third quarter of 2023, LG had amassed an operating profit of around KRW 3.24 trillion (US$2.5 billion), and the fourth quarter is anticipated to continue this positive trajectory. The full-year operating profit for 2023 is on track to surpass the previous record set in 2021 (KRW 4.06 trillion).
Cho's accelerated business plans unveiled
To attain these goals ahead of schedule, Cho has opted to categorize LG's various businesses based on their development potential and allocate them tailored strategic plans. With a total of 54 businesses, LG categorizes them into Seed, Core, Cash Cow, and Pivot operations.
Cho delineates the company's strategy, emphasizing investment concentration in Seed businesses that demand nurturing and Core businesses that are the future drivers of growth. Significantly, Core businesses will be segmented into Groups 1 and 2, each benefiting from tailored business strategies. Revenue-generating sectors dubbed Cash Cow, like home appliances, will broaden income streams through diverse business models such as B2B and D2C. Meanwhile, underperforming businesses will fall under Pivot, prompting strategic explorations for transformation.
Cho unveiled these strategies at the LG Business Expansion Conference held on December 15, 2023, providing detailed insights into their specific strategic implementations. Over 300 top-level executives from various business units, including overseas subsidiaries, actively participated in the event. Furthermore, LG is reportedly gearing up to address pressing operational strategies aimed at navigating challenges posed by global inflation and economic uncertainties.
In a recent council meeting, LG conducted organizational restructuring and managerial personnel adjustments for 2024. President Cho will continue to lead LG in 2024, and a new comprehensive management organization, reporting directly to the CEO, will be established for overseas operations. Chang-Tae Kim, the current CFO of LG Innotek, on the other hand, will take on the role of CFO for LG Electronics and concurrently serve as Chief Risk Officer (CRO).
