Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
LG CEO vows to be 'brave optimist' to deal with demand volatility
Cho Joo-wan, CEO of LG Electronics, speaks during a press conference at the CES in Las Vegas, Friday. Courtesy of LG Electronics
By Baek Byung-yeul
By Baek Byung-yeul
LAS VEGAS ― LG Electronics CEO Cho Joo-wan said Friday that the company will seek to be a “brave optimist,” showing his determination to diversify the company's business portfolio and deal with business difficulties caused by external changes.
“Our VS (vehicle component solutions) business is expected to turn a profit as of 2022 after about 10 years. As the VS division has shown, we need to be a brave optimist. It is all about the belief that a new business launched based on a strategy to provide a better customer experience will pay off someday, if we remain faithful to it despite any difficulties,” Cho told reporters on the sidelines of the Consumer Electronics Show (CES).
The CEO's comment comes as the home appliance and TV producer struggled in the fourth quarter of 2022 due to falling demand and increased material and logistics costs.
Cho said the company will boldly expand into new businesses ― as the VS business has proven ― and advance its existing ones.
On Friday, LG announced a fourth quarter earnings guidance, saying it estimated its fourth quarter operating profit at 65.5 billion won ($52.3 million), down a whopping 91.2 percent from a year earlier. For all of 2022, it estimated its operating profit at 3.54 trillion won, down 12.6 percent from 2021, while predicting sales of more than 80 trillion won for the first time.
Forecasting its performance for 2023, the CEO said external factors that have negatively affected the company will be resolved as soaring logistics costs began to come down from the fourth quarter of last year.
He also expects the company to struggle in the first half of this year due to sluggish demand, but noted the situation will get better in the second half, predicting that demand will pick up in the North American market.
“I estimate our business will struggle this year, especially the first half. But the North American region is expected to recover first from the second half. I think the intervals for economic downturns will be different in each region,” the CEO said.
As part of the company's business diversifying efforts, the company cited electric vehicle charging as an example. LG acquired local EV charger maker AppleMango last year.
“We will launch our EV charging business under the LG brand in the second quarter. We also plan to advance into the North American market in the second half of this year. As the future of the EV business is certain, we think there will be demand for infrastructure,” Jang Ik-hwan, head of the company's Business Solutions division that oversees business-to-business operations, said.
Jang added LG Electronics “will continue to invest in the EV charging business as we expect this business will become a pillar of our future portfolio.”
In terms of advancing existing businesses, the LG CEO said he expects TVs will be more profitable thanks to LG Channel, a service that provides free content on LG TVs equipped with its operating system webOS. When watching the content for free, viewers are also required to watch advertisements and this has become a new source of profit from the TV business.
“The TV business is now focused on a platform, advertisements and content, moving away from just selling devices. The revenue this business generated in 2022 was over 10 times that of 2018,” Cho said.