LG CEO pressed to revive mobile business
LG Electronics hopes to give momentum to its ailing mobile business under the new leadership of Vice Chairman and CEO Jo Seong-jin.
The Seoul-based electronics firm announced the management reshuffle on Thursday, eliminating its previous triple-CEO structure and promoting Jo as sole CEO.
He has been head of the home appliance and air solution (H&A) unit since 2013, having been noted for his crisis management ability and innovative mindset.
The H&A division reported a 1.19 trillion won ($1.1 billion) combined operating profitfrom the first to third quarters this year, up more than 25 percent from a year ago. Market watchers estimate its yearly operating profit to top 1.5 trillion won this year.
LG attributed Jo’s performance based capability and strong leadership to the unit’s stunning growth this year, leading the firm to promote him to the top post.
But the management reshuffle came at a critical time with its mobile communication (MC) division posting weak earnings in recent quarters.
LG believes the new management system — led by Jo — can give fresh momentum to its ailing mobile business, helping the unit possibly post a turnaround next year.
“LG Electronics decided to name Jo as our new sole CEO in recognition for his charismatic decision-making in recent years to launch innovative new products, and his performance has been proven in quarterly earnings,” an LG Electronics official said.
“We highly recognized his efforts to maintain stable growth and improve our brand value by successfully launching our premium brand LG Signature and Signature Kitchen Suite. This will have positive effects on other divisions.”
LG Electronics’ mobile chief Cho Juno will continue in office next year, despite predictions that he might lose his post amid weakening profitability, with its flagship devices losing market share here and abroad.
The MC division has reported an operating loss for six consecutive quarters since the April-June quarter last year.
In particular, the division posted a 436.4 billion won operating loss in the third quarter, a huge drop compared with a year ago, when it reported a 302.9 billion won operating loss. At that time, the company attributed the loss to weak sales of its flagship smartphone, the G5.
As part of the company’s efforts to offset the impact, LG has sought to realign its handset distribution structure by selling budget models in the U.S. which failed and worsened profitability.
Despite all the negative landscape, chances are that the mobile unit can generate synergies by teaming up with Jo, according to a mobile industry source.
“Jo has turned LG’s home appliance division into the global No. 1 brand,” said the source. “I believe other units — including the MC — can take advantage of his decades-long expertise in the electronics industry.”