LG Electronics to invest $7.59 bil. in 2024 to secure growth momentum
Attendees try out an Alpha-able future mobility concept in the LG booth at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, U.S., Jan. 9. Reuters-Yonhap
LG Electronics's chief executive said Wednesday the company's annual investment will reach 10 trillion won ($7.59 billion) this year in a bid to expand its business boundaries and secure future growth momentum.
"Despite protracted macroeconomic uncertainties, we are committed to maximizing future growth by increasing investment based on our strategic priorities," CEO Cho Joo-wan said during a press briefing at Conrad Las Vegas at Resort World in Las Vegas on the sidelines of CES 2024.
"The total investment for future competitiveness in 2024 is expected to reach 10 trillion won."
Out of the total, 4.5 trillion won will be allocated to research and development, and 3.5 trillion won will be spent on regular facility maintenance. The remaining 2 trillion won will be set aside for possible mergers and acquisitions (M&As).
The Korean electronics giant has been undergoing a transformation, shifting its business portfolio from home appliances to business-to-business segments, including automotive electronics, air solutions and TV operating systems, following its exit from the mobile market in 2021.
It earlier announced plans to invest more than 50 trillion won by 2030 to complete its business transformation and achieve 100 trillion won in sales.
"If we achieve an average growth of 7 percent every year, we can reach the goal of 100 trillion won in 2030," Cho said. "It's not an empty slogan; we've based these numbers on a thorough examination of our potential and capability."
As part of its transformation plan, LG Electronics is showcasing new business models for mobility and artificial intelligence, along with products from its conventional home appliances sector, at CES 2024, the world's most influential trade show taking place in Las Vegas from Tuesday to Friday.
On top of that, the LG Electronics CEO hinted at possible M&A deals this year to strengthen its new business portfolio.
"I can't disclose the names of our target companies, but we're looking at companies in the business-to-business and emerging sectors," he said. "We're working to produce results later this year."
Recent indications suggest that LG Electronics' business transformation is on track, with a favorable fourth-quarter earnings estimate released Monday.
The operating profit quadrupled to an estimated 312.5 billion won for the October-December period, driven by strong sales of home appliances and vehicle component solutions. Sales expanded by 5.9 percent to an estimated 23.2 trillion won.
LG Electronics will announce its finalized earnings results, including net income, for 2023 later this month. (Yonhap)