After being appointed as the Vice-Chairman of LG Electronics 5 years ago, Vice-Chairman Koo Bon-Joon of LG Electronics is putting his focus on leading LG Electronics in OLED (OLED176 and OLED) TV and auto parts markets. Another assignment is to bring back competitive edge that Smartphone business, which is going up and down, once had.

Approximately 5 years ago on the 1st of October of 2010, Vice-Chairman Koo Bon-Joon was suddenly appointed as the CEO of LG Electronics. During that time, many people’s views were that LG Electronics was having difficult time because it did not understand the trend of growth of Smartphone correctly.

Although there were positives and negatives in past 5 years, the situation that LG Electronics currently is in is similar to that of its situation in 5 years ago when Vice-Chairman Koo Bon-Joon’s system was established. His sense of critical situations did not really improve much, and LG’s Smartphone business is not recognized as a major manufacturer because it felt behind of Samsung and Apple. Its TV business could not avoid a loss in first half of 2015. Although household appliance business is still putting out consistent results, it is not a high-added value business any longer. LG Electronics’ stock, which was once valued at $84.31 (100,000 KRW) per stock, is currently staying in the early part of $33.72 (40,000 KRW).

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Important task of growing LG Electronics continuously is still laid out in front of Vice-Chairman Koo, who is a member of owner’s family unlike normal professional executives. Instead of being joyful and grieved depending on the results that are in front of him, he can plan LG Electronics that is able to last.

He continuously emphasized the importance of ‘being the leader in markets’ and ‘strong LG’ ever since he was appointed as the Vice-Chairman and that is why he also carried out many investments. Investments in R&D department, which was $2.3 billion (2.7 trillion KRW) in 2010, surpassed $2.5 billion (3 trillion KRW) in 2012 and increased up to $3.1 billion (3.66 trillion KRW) in 2014. Percentage of R&D expenses out of sales also increased from 4.6% in 2010 to 6.2% in 2014.

He needs to express his words through results now. In order to bring back LG Electronics to the top, majority believes that LG Electronics needs to grow market-leading OLED176 TV business and auto parts business that it continuously invested in.

OLED TV is a major item that Vice-Chairman Koo continuously invested in in order to become a leader in the market. He once had an experience of making LG Display the best in the world with his unique decision. Although LG Electronics once had an opportunity to become a leader in TV market with 3D display, it was not able to twist the rein. In OLED market that is flowering right now, LG Electronics needs to work harder to clearly mark its position by using all of LG Group’s abilities.

Revival of Smartphone is also necessary. Although there are indications that industry is entering maturation period, it is still a major item that can be tied to IoT80, financial payment, and wearable equipment. To expand LG Electronics’ business hereafter, it is necessary for its phone business to have a turnaround. Above all, its primary task however is to clearly mark its position as one of major manufacturers globally.

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Some are advising that LG needs to increase its speed in finding new source of profits along with previous industries. Vehicle component (VC) business that Vice-Chairman Koo elevated as one of business headquarters in 2013 also needs more aggressive response. Although it is still a business that is making a loss, indications from the markets point that it will be okay. Considering the characteristics of B2B, Vice-Chairman Koo himself will attend meetings with major customers. It is important to make VC as LG Electronics’ major business by increasing abilities in ‘next-generation vehicle’ area to secure additional future growth items.

After its reorganization in end of last year, LG Electronics established ‘Innovation Business Center’ to create new businesses and for B2B business. It also established ‘Energy Business Center’ to focus on energy solution such as solar energy, ESS151, and others. Instead of being joyful and grieved about immediate results, new businesses are chosen as areas that will enable LG Electronics to secure competitive edge in medium and long-term.

“It is important for LG Electronics to make next growth power as its early source of profits while maintaining and strengthening its leadershipin major industries hereafter. Koo Bon-Joon’s system, which is facing its 5th year, needs to reorganize its battle line and plan new launch methods systematically.” said one high-rank official in financial industry.

Senior Reporter Kim, Seungkyu | seung@etnews.com

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<[Table] Development of LG Electronics’ performance per quarter ▲LG Electronics’ sales in past 10 quarters were $11.9 billion (14.1 trillion KRW (1st quarter of 2013)), $12.8 billion (15.2 trillion KRW (2nd quarter of 2013)), $11.7 billion (13.9 trillion KRW (3rd quarter of 2013)), $12.6 billion (14.9 trillion KRW (4th quarter of 2013)), $11.8 billion (14 trillion KRW (1st quarter of 2014)), $12.7 billion (15.1 trillion KRW (2nd quarter of 2014)), $12.4 billion (14.7 trillion KRW (3rd quarter of 2014)), $12.9 billion (15.3 trillion KRW (4th quarter of 2014)), $11.8 billion (14 trillion KRW (1st quarter of 2015)), and $11.7 billion (13.9 trillion KRW (2nd quarter of 2015)). ▲LG Electronics’ operating profits in past 10 quarters were $295 million (349.5 billion KRW (1st quarter of 2013)), $404 million (479.3 billion KRW (2nd quarter of 2013)), $184 million (217.8 billion KRW (3rd quarter of 2013)), $201 million (238.1 billion KRW (4th quarter of 2013)), $404 million (478.8 billion KRW (1st quarter of 2014)), $514 million (609.7 billion KRW (2nd quarter of 2014)), $392 million (465 billion KRW (3rd quarter of 2014)), $232 million (275.6 billion KRW (4th quarter of 2014)), $257 million (305.2 billion KRW (1st quarter of 2015)), and $206 million (244.1 billion KRW (2nd quarter of 2015)). Reference: LG Electronics >