November 25, 2024

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LG Electronics CEO Cho Joo-wan speaks at a press briefing on the sidelines of the CES 2024 in Las Vegas on Wednesday. (LG Electronics)

LAS VEGAS -- LG Electronics CEO Cho Joo-wan said Wednesday that the tech giant will spend about 10 trillion won ($7.6 billion) in annual investment, more than double 2023's spending, to maximize its future growth engines despite lingering uncertainties in the macroeconomic circumstances.

“We’re committed to maximizing future growth by expanding investment, mainly focusing on key businesses with high-growth and high-profit such as electronics, heating, ventilation and air conditioning, and webOS platforms,” the CEO said at a press conference held on the sidelines of the CES 2024 in Las Vegas.

Of the total, 4.5 trillion won will be used for research and development, 3.5 trillion won will be used on regular facility maintenance, and the rest of 2 trillion won will be used for possible mergers and acquisitions, the chief strategy officer Lee Sam-soo said.

Previously, LG announced plans to invest more than 50 trillion won by 2030 to transform its portfolio and improve the quality of its business, following its exit from the mobile business in 2021.

It has changed its main business focus, expanding from home appliances to various business-to-business sectors, including automotive products, air solutions, and TV operating systems.

At this year's tech show, LG is highlighting its new business models for artificial intelligence and mobility, alongside various home appliance products.

"If we log an average annual growth of 7 percent, we can reach the goal of 100 trillion won in sales in 2030," Cho said. "The specific numbers came after we went through various examinations on our potential and capability."

"We believe our growth potential will likely reach 8 to 9 percent, or even a double-digit figure."

Meanwhile, LG is expected to hit a record-high revenue of 84 trillion won in 2023.

Earlier this week, the company announced its earnings guidance for the fourth quarter of 2023. Sales are estimated to increase 5.9 percent on-year to 23.15 trillion won in the September-December period, while operating profits more than tripled to 312.5 billion won.

The tech giant is set to announce its fourth-quarter earnings results on Jan. 25.

The LG chief also hinted at possible M&A deals this year but was cautious about mentioning further information on the plan.

"We can't disclose the names of (targeted buyout) firms, however, we're looking at companies in B2B and emerging sectors as part of our transformation effort. ... It is because we need those capabilities to secure the growth momentum," he said.

"I believe we'll likely be able to talk about one to two deals to the market within this year."

By Jie Ye-eun (yeeun@heraldcorp.com)