'Haehyeon Gyeongjang' Gu Ja-yeol "Seizing Opportunity After COVID Crisis, Leap to Sustainable Company" (Comprehensive)

"Return to Basics, All Members Must Actively Practice Social Values"... Emphasizing 'Haehyeon Gyeongjang (解弦更張)'
Presenting 4 Core Goals ▲Prioritize Cash Generation Management to Prepare for Global Uncertainty ▲Achieve Results in LS's Future Growth Businesses such as Renewable Energy and Eco-Friendly Sectors ▲Secure Independent Business Capabilities of Overseas Subsidiaries ▲Accelerate Digital Transformation

Koo Ja-yeol, Chairman of LS Group

[Asia Economy Reporter Kim Hyewon] Koo Ja-yeol, chairman of LS Group, stated in his New Year's address on the 4th that we should do our best to seize the opportunities after the COVID-19 crisis and leap forward as a company capable of sustainable growth.

In particular, he emphasized 'Haehyeon-gyeongjang (解弦更張)' with the intention of returning to basics and encouraging all members to actively practice social values. Haehyeon-gyeongjang is an idiom meaning to tighten the loosened strings of a geomungo (a traditional Korean string instrument) to restore its original sound.

LS Group used to hold a 'New Year's Greeting Ceremony' every year at the main auditorium of the LS Tower in Anyang, gathering the group chairman, presidents, and employees, but this year it was replaced by Chairman Koo’s video New Year's address to prevent the spread of COVID-19.

Chairman Koo expressed gratitude for the dedication and efforts of all LS Group employees last year, saying, "Despite the unprecedented situation of the COVID-19 pandemic that made business activities very difficult, we achieved meaningful results both big and small thanks to the commitment of our employees."

However, he noted, "Last year, with restrictions on domestic and international travel and the global economy virtually at a standstill, our globally oriented activities faced limitations," and added, "Although there is hopeful news about the development and distribution of COVID vaccines this year, the currently sluggish economy is unlikely to rebound in the short term."

Chairman Koo further stated, "Economic and financial risks may materialize, especially in emerging countries with weak finances, and excessive liquidity and future uncertainties are expected to cause volatility in real assets and currencies to reach a peak."

He identified four core goals for this year: ▲ generating cash flow to prepare for uncertainties and promote future-leading new businesses ▲ producing visible results in future growth businesses such as renewable and eco-friendly energy ▲ securing independent business capabilities for overseas subsidiaries ▲ accelerating the transformation of the operating system through digital transformation activities.

Chairman Koo said, "Recently, many companies are pursuing ESG management centered on environment, society, and governance as a sustainable strategy. As manufacturing is our core, LS must once again return to basics, and each member must actively practice these social values to secure LS’s future and become a company respected and loved by all."

He emphasized, "To this end, please remember the phrase Haehyeon-gyeongjang, which means tightening the loosened geomungo strings to restore the original sound, and encourage one another."

Full text of Koo Ja-yeol, Chairman of LS Group’s New Year's Address

Dear employees,

A hopeful new year has dawned. I wish you and your families health and happiness throughout this year.

This year, the Year of the White Ox (辛丑), is said to carry sacred energy. Since the ox symbolizes leisure and peace, I hope this year will be one in which everyone overcomes adversity with diligence and sincerity.

Everyone,

Last year, despite the unprecedented situation of the COVID-19 pandemic that made business activities very difficult, we achieved meaningful results both big and small thanks to your dedication and efforts.

LS Cable & System significantly increased orders and sales of submarine cables, LS Nikko Copper secured stable raw materials, and LS Mtron minimized the negative impact of the pandemic through efforts to improve profitability.

Also, LS Electric transformed its power and automation business into a CIC in line with industrial trend changes, and energy affiliates such as E1 and Yesco have added new growth engines like renewable energy and are operating them.

However, last year, with restrictions on domestic and international travel and the global economy virtually at a standstill, our globally oriented activities faced limitations.

Although there is hopeful news about the development and distribution of COVID vaccines this year, the currently sluggish economy is unlikely to rebound in the short term.

In particular, economic and financial risks may materialize, especially in emerging countries with weak finances, and excessive liquidity and future uncertainties are expected to cause volatility in real assets and currencies to reach a peak.

LS employees,

Over the past few years, we have made great efforts to build resilience and strength that do not waver despite adverse external conditions.

Now, we must do our best to seize the new opportunities that will come after the crisis and leap forward as a sustainable growth company.

To this end, this year we will strongly pursue the following four core goals together with you.

First, we must prioritize 'cash generation' in management to prepare for global economic uncertainties and invest in future-leading new businesses.

We should recognize cash generation as an important management indicator by expanding sales of high-margin products and improving the operational efficiency of inventory and receivables.

Second, we must produce visible results in LS’s future growth businesses such as renewable energy and eco-friendly sectors.

By early achievements in new business areas such as solar-ESS systems, smart grids, and electric vehicle parts, we should contribute to the public good and create a virtuous cycle where companies and society grow sustainably together.

Third, to enhance the stability of overseas businesses and strengthen global competitiveness, overseas subsidiaries must ultimately acquire independent business capabilities.

To this end, overseas subsidiaries should elevate their level so that local talent acquisition and development, and management can be systematically operated.

Lastly, we must accelerate digital transformation activities and rapidly shift to a digital-based operating system.

Due to recent technological advances and the impact of COVID-19, digital transformation has become a necessity, not a choice, for companies.

Therefore, we will expand investments in IT infrastructure such as cloud and professional talent, and all employees must quickly transition their work methods and mindset to a digital basis.

Dear employees,

Recently, many companies are pursuing ESG management centered on environment, society, and governance as a sustainable strategy.

As manufacturing is our core, LS must once again return to basics, and each member must actively practice these social values to secure LS’s future and become a company respected and loved by all.

To this end, please remember the phrase Haehyeon-gyeongjang, which means tightening the loosened geomungo strings to restore the original sound, and encourage one another.

Even in difficulties, I hope you start the new year morning with confidence that we will surely achieve the results we desire.

Thank you.