New Business Full Throttle under LG Kwang-mo's Leadership... The Power of 'Selection and Concentration'

"Trimmed the Fat and Strengthened the Core"

4th Anniversary Management Evaluation

Koo Kwang-mo, Chairman of LG Group. (Photo by LG Group)

[Asia Economy Reporter Moon Chaeseok]

"We trimmed the excess and strengthened our fundamentals."

This is the evaluation of the four years of management under the leadership of Koo Kwang-mo, who has championed 'pragmatism.' Chairman Koo focused on improving the group's structure by increasing investments in future growth engines such as electric vehicles and artificial intelligence (AI), while boldly withdrawing from perennial deficit businesses like mobile and solar panel sectors. Since his inauguration, the company's total assets have significantly increased, and its scale continues to grow.

According to the business community on the 27th, Koo Kwang-mo, chairman of LG Group, who will mark his 4th anniversary as chairman on the 29th, succeeded the late Koo Bon-moo, who passed away on May 20, 2018. Since taking the helm, he has attracted attention through bold mergers and acquisitions (M&A) and restructuring. He completed the separation from LX Group and firmly improved the group's structure by focusing on high value-added businesses such as electric vehicle batteries, automotive components, and organic light-emitting diodes (OLED).

According to the Fair Trade Commission, LG Group's total fair assets this year amounted to 167.5 trillion won, a 36.1% increase from 123.1 trillion won in 2018, the first year of Chairman Koo's tenure. During the same period, the number of affiliates increased by three from 70 to 73, but compared to 75 in 2019, it decreased by two. This suggests that the group not only expanded its size but also devoted great effort to 'selection and concentration.' Early in Chairman Koo's tenure, LG attracted attention for its restructuring capabilities by withdrawing from the mobile (MC) and solar panel businesses of its flagship affiliate LG Electronics. Recently, it has been praised for vertically integrating electric vehicle charging, batteries, and components (automotive electronics). The group has decisively invested in profitable businesses and cut off loss-making ones.

Among Chairman Koo's successful management cases, the withdrawal last year from the MC division, which had accumulated an operating loss of 5 trillion won before its exit, stands out. Cutting off the MC division meant abandoning smartphones, which are directly linked to LG Group's brand value, and expressing a strong will to significantly improve profitability. The official separation from LX Group, approved by the Fair Trade Commission on the 23rd, also drew attention. Even the Fair Trade Commission stated, "LG will strengthen independent and responsible management in electronics, chemicals, and telecommunications services, while LX will focus on semiconductors, logistics, and trading," and "the ownership and governance structure of the large business groups will become clearer." Last year, LX Group's operating profit increased by 213% year-on-year to 1.2591 trillion won, leading to an assessment of a 'beautiful separation.'

It was not just about trimming the excess. Two months after his appointment, LG Electronics acquired Austrian automotive headlamp manufacturer ZKW for about 1.4 trillion won. This acquisition laid the foundation for a solid electric vehicle ecosystem that, four years later, includes 'vehicle infotainment (automotive electronics and VS business division) ? e-powertrain (joint venture LG Magna) ? charging infrastructure (startup Apple Mango acquisition) ? establishment of a five-corner production system for electric vehicle batteries (centered on LG Energy Solution-General Motors joint venture "Ultium Cells").' Additionally, LG is accelerating its business restructuring toward OLED and robotics, engaging in fierce competition in new businesses with other major domestic and global companies such as Samsung, Hyundai Motor, and SK Group.

A business community official said, "Even large conglomerates can fall into crisis if they fail to properly select and concentrate limited resources amid rapid industrial restructuring. Considering that LG Group has solidly built its electric vehicle portfolio over the past four years under Chairman Koo's leadership, it can be evaluated that the group has done well in selection and concentration."

Kim Kyung-jun, CEO of CEO Score, commented, "Chairman Koo's LG Group, by reorganizing the MC division and solar sector and building an electric vehicle value chain, has established a distinct identity from the previous chairman while successfully practicing selection and concentration. It is a case of strategic business structure reorganization to lead the digital era."