LG to focus on B2B 'unicorns' to diversify revenue streams

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LG to focus on B2B 'unicorns' to diversify revenue streams

Published: 21 Aug. 2024, 16:21 Updated: 21 Aug. 2024, 18:49

LEE JAE-LIM
lee.jaelim@joongang.co.kr

LG Electronics CEO William Cho speaks during LG's Investor Forum held at the LG Science Park in western Seoul on Wednesday. [LG ELECTRONICS]

LG Electronics is moving to diversify its revenue streams by expanding into new business-to-business (B2B) "unicorns" such as chillers, automotive parts and smart factories.

LG CEO William Cho offered updates on the company’s new goals on Wednesday, a year after its “2030 Vision” initiative was announced.

The core of the vision is to transform LG into a “smart life solutions company” beyond home appliances to include lifestyle, commercial, mobility and virtual spaces.

“Inspired by the concept of unicorn companies, we have been referring to new business models that generate over 1 trillion won ($749 million) in annual revenue as ‘unicorn businesses’ during our portfolio renovation process,” Cho said at the LG’s Investor Forum held at the LG Science Park in western Seoul. “For instance, our home appliance subscription service already surpassed that figure in annual revenue last year, securing its position as a unicorn business.”

For the first half of this year, the company reported an on-year sales growth rate of 8 percent and an operating profit margin of 6 percent.

In B2B sectors such as in heating, ventilation, and air conditioning (HVAC) as well as automotive parts and smart factories, LG aims to increase the proportion of sales to 45 percent of total revenue by 2030. For the first half of this year, the company reported a 35 percent share of revenue for the B2B sector.

Cho targeted LG’s chiller business as a new core growth engine behind the surge in demand for AI data centers. It has achieved an average annual growth rate of over 15 percent the last three years, with overseas sales seeing a twofold increase during the same period.

Its relatively new smart factory business aims to achieve more than 250 billion won in orders by the end of this year, with the company stating that it has already reaching deals with 20 firms worth 200 billion won at the prior press event held last month.

LG is also advancing its platform business, aiming to invest over 1 trillion won by 2027 to strengthen its webOS platform business. Gadgets capable of integration with webOS range from TVs to vehicle infotainment systems and smart home appliances.

From expanding platform-based services, transitioning to B2B sectors and fostering unicorn businesses, LG aims to generate 50 percent of its total revenue and 75 percent of operating profit from these key areas by 2030.

“These goals are already becoming a reality quickly,” Cho stated. “We are driving changes toward a business structure that can secure strong growth and profits, ensuring that LG Electronics receives the proper valuation it deserves.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]