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First of all, I would like
to convey my deepest gratitude to our shareholders who
give us the great support and encouragement, which enabled
us to move forward to become a true global company. I
would like to take this opportunity to explain you the
fundamental strength of LG Electronics and strategy going
forward. Without further due, allow me to summarize the
fundamental strength of LG Electronics' in
threefold.
First, we have a strong cash generator at the same time
strong growth drivers. Our appliance division has grown
more than 20% for last 5 years with more than 12% operating
margin. No other appliance company has shown such remarkable
performance. While appliance is providing a strong cash
foundation, the handset business has provided us with
strong growth, registering more than 50% CAGR for the
last two years. We believe PDP and Digital TV are early
to follow the precedents set by handsets.
The second strength I would like to emphasize is that
LGE became very much a profit-focused company. In the
face of difficult IT industry outlook over the past several
years, we have aggressively restructured our IT related
products line as well as the telecom system business.
Through this effort, our Display & Media division
and System division showed significant improvement in
profitability.
China is another source of profitability improvement where
we shifted many of low-end production in order to maintain
profitability. China is not only production base, but
great market for us as well. As the survey shows, LG is
one of the top brand names recognized in China, and thus
we are enjoying good premium on our products in China.
Last, I believe LG Electronics is the frontrunner in enhancing
corporate governance in Korea. The demerger of LG Electronics
into a holding company and an operating company effective
as of April 1, year 2002, was a historic turning point
for us. LG Electronics can now move on to greater heights,
freed from the burden of investment in its affiliates
and serve to maximize shareholder value, fostering "accountable
management by experienced managers." while
bringing a new impetus to management transparency. |
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| The
Road Ahead |
Past
few years have been tough road for all the electronic
companies due to slowdown in the IT sector. In order to
overcome such difficulties, we have implemented a tighter
control on cost and risk management. Over the mid term,
we will continue to adopt tougher risk management controls,
particularly on receivables and inventory. Also we will
maintain sufficient cash reserve for possible liquidity
problem in financial market while reducing overhead cost.
This policy, however, does not mean we will not look to
prepare ourselves for the future. We are now preparing
for PDP 3rd line while allocating resources in 3G handsets
and OLED technology to stay ahead of the competition.
However, investment will be made only within the scope
of our cash generating capabilities, at the same time
selecting areas of investment where our core competencies
are best met.
Also, we will continue to make an effort to raise our
brand power, which we believe is a key element to raise
LG Electronics to the global top tier level. In order
to do, so we raised our budget on the brand marketing
investment in North America and European market, utilizing
Appliance products and handset as our main tools.
Again, I would like to emphasize that one of our top priorities
at LG Electronics is to raise shareholder value. Our plan
is to invest in strategic key business areas where we
can fully maximize returns on invested capital. With the
adoption of the holding company structure we will continue
to improve corporate governance and transparency. In short,
we will continue to make every effort to meet the high
standards expected by our shareholders.
Building on these initiatives, we will accelerate efforts
to develop premium products tailored to the changing
needs of customers, expand overseas sales but never take
our eye off the main goal of enhancing profitability.
Thank you. |
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