LG Elec to raise capex, R&D spending; eyes acquisition

LAS VEGAS -- LG Electronics Inc., the leading global home appliance maker, plans to spend more on capital expenditures, as well as research and development despite uncertain macroeconomic uncertainties while targeting an acquisition, especially in the business-to-business and robot industries, to secure new future growth engines.

LG set aside 10 trillion won ($7.6 billion) for capex and R&D – 5.5 trillion won for the former and 4.5 trillion won for the latter, its CEO Cho Joo-wan said on Wednesday in Las Vegas, Nevada. The South Korean tech giant spent around 6 trillion won-7 trillion won on those sectors last year, according to company officials.

It also committed 2 trillion won for an acquisition in 2024.

“We plan to spend more than 10 trillion won this year to strengthen future competitiveness,” Cho told reports on the sidelines of the Consumer Electric Show (CES) 2024, the world’s largest annual tech trade show. “We will make the investments under strategic priorities although the macroeconomic conditions surrounding the business remain uncertain.”

LG’s investments are set to focus on automotive electronics, heating, ventilation and air conditioning, built-in appliances and the platform for webOS, its TV operating system, Cho said.

B2B, ROBOTS

LG has its eye on one or two companies in the B2B and robot sectors, Cho said.

“We are closely watching the robot business, especially in the delivery and logistics industries,” he said. “We left the door open for stake investments or M&A in promising robot companies.”

The company plans to accelerate its efforts for its goals announced last year of raising annual growth and operating profit margin to 7%, respectively, and ramping up its market capitalization by more than seven times earnings before interest, taxes, depreciation and amortization by 2030 through those investments this year, Cho said.

The heads of LG’s business divisions offered bright outlooks.

The automotive electronics division, the company’s future growth engine, is expected to enjoy long-term growth in the electrification of the global car industry, its head said.

“The electric vehicle market is facing a temporary slowdown, but the trend of electrification of automobiles will not change,” said Eun Seok-hyun, the head of LG’s vehicle solutions division.

The division’s sales topped 10 trillion won last year with order backlogs at around mid-90 trillion won, Eun said.

The company’s TV division, which is also focusing on content and services, aims to increase webOS sales.

“Revenue related to webOS is expected to reach 1 trillion won this year,” said Park Hyoung-Sei, the head of LG’s home entertainment division. “Growing TV sales boosted webOS customers, while sales of the operating system to other TV makers also increased.”

Write to Ik-Hwan Kim at lovepen@hankyung.com
 

Jongwoo Cheon edited this article.