LG Electronics will continue to invest in promising new business areas that will serve as the foundation for future growth, such as AI-based robots and electric vehicle charging, and will actively advance into the AI data center cooling market, led by the chiller business.

On the 21st, LG Electronics held an 'Investor Forum' at the Magok LG Science Park, inviting domestic and foreign institutional investors and securities analysts.

CEO Cho Joo-wan came forward and introduced the progress and direction of the business portfolio innovation that has been pursued for about a year since the announcement of the 2030 future vision. In addition to CEO Cho Joo-wan, CFO (Chief Financial Officer, Executive Vice President) Kim Chang-tae, CSO (Chief Strategy Officer, Executive Vice President) Lee Sam-soo, and executives in charge of fostering major businesses such as HVAC (Heating, Air Conditioning, Refrigeration), webOS content/service, and subscription attended.

At the beginning of the event, LG Electronics shared the interim progress of its financial goals for its 2030 vision. Based on the business performance in the first half of this year (excluding LG Innotek), the sales growth rate compared to the same period last year was 8%, the operating profit rate was 6%, and the EV/EBITDA multiple was 4 times.

CEO Cho Joo-wan said, “Over the past year or so, we have steadily laid the foundation for achieving our future vision, and I am proud to say that we are creating ‘structural change’ and ‘sustainable performance’ in various areas,” emphasizing, “We will continue to make consistent and powerful progress to achieve our goals with strong confidence and a sense of responsibility.”

LG Electronics is pursuing portfolio innovation under the strategic directions of △maximizing growth of existing businesses, △platform-based service business, △accelerating B2B, and △nurturing new businesses.

First, maximizing the growth of existing businesses is an attempt to overcome the limitations of mature main businesses such as home appliances and TVs and maximize their potential. Representative examples include combining services with the home appliance business, which was limited to one-time sales, to launch a subscription business, or expanding D2C (direct sales to consumers) to expand customer choices and provide differentiated experiences.

In the case of B2B acceleration, it is achieving results in areas such as automotive parts, HVAC, and smart factories in conjunction with market inflection points such as digitalization and electrification. LG Electronics plans to increase the B2B portion of total sales to 45% by 2030. The B2B portion, which was at 27% in 2021, increased to 35% in the first half of this year.

The battlefield business has secured a backlog of orders of over 100 trillion won. Sales of high value-added products such as digital cockpits are increasing, and investment in global production sites for business expansion is also active. The heating, cooling and air conditioning business is leading the high-efficiency and eco-friendly market with technologies such as inverters and heat pumps, while actively targeting the cooling system market such as chillers due to the recent surge in demand for AI data centers, and is pursuing rapid growth. The smart factory business, which has recently been in full swing, is expanding its business based on capabilities proven in various industries within the LG Group, by incorporating AI and robots into its 60-year manufacturing know-how. As of the end of this year, the order amount is expected to exceed KRW 250 billion.

We will also continue to invest in promising new business areas that will become the foundation for future growth. For commercial robots, we will focus on securing AI-based software-defined robotics (SDR: Software Defined Robotics) capabilities, and for electric vehicle charging businesses, we will focus on securing business opportunities through collaboration with global leading partners.

LG Electronics is leading the paradigm shift in the home appliance business with a subscription business that combines home appliances with services. Unlike product-centered businesses that generate one-time sales and profits at the time of sale, this is a change in the way they maintain relationships with customers and generate continuous profits by providing optimized care services for products even after sale.

The subscription business rose to the ranks of unicorn businesses last year with annual sales of 1.1341 trillion won. This is a 33% increase from the previous year. This year, the growth rate is even steeper. This year, home appliance subscription sales are expected to increase by nearly 60% and exceed 1.8 trillion won.

The webOS-based advertising/content business is a model that creates additional revenue sources by using hundreds of millions of products worldwide as a platform. This year’s sales are expected to exceed KRW 1 trillion, a four-fold increase from 2021. LG Electronics is focusing on ▲ expanding the parent company ▲ diversifying the profit model ▲ strengthening business capabilities to achieve rapid growth in this business.

LG Electronics' HVAC business has a wide portfolio, including home air conditioners, commercial air conditioners for buildings/schools/public institutions, industrial air conditioning systems for factories/power plants, and heating systems that replace boilers. It is one of the core businesses that is growing rapidly along with the market changes such as decarbonization and electrification.

In particular, with the recent AI craze, the demand for data center construction is increasing, especially among global big tech companies, and new opportunities are opening up for the chiller business, which is used as a cooling facility. A chiller is a facility that cools water with refrigerant to create cold air and supply cooling to large buildings. The average annual growth rate of LG Electronics’ chiller business over the past three years has exceeded 15%. Over the same period, overseas sales have more than doubled.

LG Electronics plans to aggressively target the data center cooling market by leveraging its experience in supplying chillers of various specifications to power plants, data centers, etc., and its high-efficiency, high-performance original technology in the heating, cooling, and air conditioning business. In addition, through continuous research and development, it is preparing to commercialize new solutions such as liquid immersion cooling, which has recently emerged.

LG Electronics will consistently pursue innovation in its business portfolio to achieve its mid- to long-term goal of the 2030 vision. Through this, it plans to achieve 50% of the company’s sales and 75% of its operating profit by 2030 in key areas of promotion, including △expanding platform-based service businesses, △accelerating B2B conversion, and △nurturing new businesses.

“This goal is already quickly becoming a reality,” said CEO Cho. “We will pursue a change in business structure that can secure high growth potential and stable profits, and we will work to ensure that LG Electronics’ value is more properly evaluated.”