LG Group has begun a series of business review meetings starting October 19, assessing the performance of its major subsidiaries and strategies for the upcoming year. Following a significant CEO turnover last year, this year's year-end personnel changes are expected to prioritize stability over renewal. However, the contrasting performance of LG Electronics and its chemical division raises the possibility of additional leadership changes based on management results.
According to industry sources, LG Group Chairman Koo Kwang-mo will preside over these meetings for about a month, starting with electronics subsidiaries such as LG Electronics, LG Display, and LG Innotek, followed by chemical and telecommunications divisions. CEOs and heads of business units will discuss this year's performance, next year's business plans, and key management issues.
This series of meetings is significant as it marks the first assessment of performance since the major executive changes in key subsidiaries last year. In the regular personnel changes, LG Group replaced CEO Jo Joo-wan of LG Electronics and Vice Chairman Shin Hak-cheol of LG Chem, appointing Ryu Jae-cheol and Kim Dong-chun as their successors, respectively. Lee Jae-woong, formerly Vice President of LG Electronics, was also appointed as the head of D&O.
Performance among subsidiaries has been mixed this year. LG Electronics reported an estimated operating profit of 781.8 billion won for the third quarter, a 13.5% increase from the same period last year. Cumulative operating profit for the third quarter reached 4.346 trillion won, up 55.9%. The media and entertainment solutions division, which recorded significant losses last year, is also expected to return to profitability, indicating a recovery across all four business units.
LG Innotek continues to show improvement, with operating profit for the first half reaching 541.1 billion won, a 296.4% increase year-on-year. Although profitability is expected to slightly decline in the third quarter due to falling exchange rates, revenue growth is anticipated from increased supply of camera modules for the new iPhone. LG Energy Solution also exceeded market expectations with a third-quarter operating profit of 756 billion won, raising the likelihood of retaining both CEO Kim Dong-myung and LG Innotek President Moon Hyuk-soo due to their improved performance.
In contrast, LG Chem is struggling with profitability due to a downturn in the petrochemical market and declining electric vehicle demand. NH Investment & Securities estimates LG Chem's third-quarter operating profit at 9.9 billion won, significantly below the market forecast of 187 billion won. The petrochemical division is expected to incur an operating loss of 225.1 billion won, and the recovery of the cathode materials business is progressing slowly. Under Kim Dong-chun's leadership, restructuring and profitability improvement are urgent tasks.
The upcoming regular personnel changes are expected to favor the retention of existing management. Last year, only 34 executives were promoted at LG Electronics, the smallest number since Chairman Koo took office. Given the significant executive turnover and organizational streamlining last year, this year is likely to focus on strengthening business competitiveness rather than extensive personnel changes.
However, there remains the possibility of additional leadership changes, particularly in underperforming subsidiaries. LG Group has formalized its policy to conduct interim personnel changes in response to shifts in the management environment. While this year's changes may emphasize organizational stability, there is speculation about potential 'one-point' appointments of new CEOs in some subsidiaries based on future performance. For instance, a surprise appointment of Lee Sun-joo, formerly of L'Oréal, as CEO of LG Household & Health Care occurred just two months before last year's regular personnel changes.
* This article has been translated by AI.
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