Improve your constitution by tightening your belt and shaving your bones... Electronics industry begins to break out of slump

(Seoul = Yonhap News) Reporter Seong-heum Cho = The domestic electronics and home appliance industry, which is facing a global economic slowdown, shrinking consumption, and a cost burden due to the pursuit of Chinese companies, is starting to break out of the slump through drastic structural improvement.

As a result of continuous efforts to improve management efficiency and reorganize business structure, results are gradually becoming visible.

◇ LG TV expects annual surplus this year… Effects of business reorganization during crisis

According to the industry on the 10th, LG Electronics recorded an operating profit of 781.8 billion won in the third quarter of this year, with its cumulative operating profit exceeding 4 trillion won this year.

This is the first time that combined operating profit for the first to third quarters exceeded 4 trillion won.

This year, LG Electronics has been experiencing significant growth in both sales and operating profit every quarter compared to the same period last year.

It is growing even compared to two years ago, not just last year when it was sluggish.

This was partly due to the growth of business-to-business (B2B) and new businesses, but was also based on the solid performance of its main home appliance and electronic businesses.

The Media Entertainment (MS) division, which is in charge of the TV business, recorded an operating loss of KRW 750.9 billion last year, but is expected to achieve annual surpluses of KRW 370 billion in the first quarter and KRW 220 billion in the second quarter this year, thanks to the expansion of premium products and growth in emerging markets.

The Home Appliances (HS) division, which is in charge of the home appliance business, is also expected to continue growing despite the slowdown in global demand.

The strong performance of these businesses can be interpreted as the result of the company's continued efforts to improve its business structure despite last year's slump.

Despite sluggish sales last year, LG Electronics began slimming down its organization by implementing voluntary retirement for the first time in two years at the MS division.

This year, executives also tightened their belts, using economy flights for business trips that did not last longer than 10 hours.

In addition to the top-tier OLED lineup, the company is adding a premium LCD category while also pursuing business model diversification based on the smart TV platform.

In home appliances, the company defended its market share based on the premium market and secured global manufacturing competitiveness through smart factories.

In addition, we are simultaneously responding to high value-added demand and future demand by diversifying our business strategies by region.

◇ Samsung Finished Products Division “Using the Kautta Crisis as an Opportunity to Improve Constitution”

Samsung Electronics continued to see a slump in its electronics and home appliance business in the third quarter, but is using this as an opportunity to accelerate the improvement of its overall business structure.

In the third quarter, the finished products division (DX) posted its first deficit (operating loss of KRW 800 billion) since the company was founded in the previous quarter, and it is analyzed that this trend has continued this time as well.

It is estimated that the mobile (MX) and network divisions would have recorded a deficit of around 1.5 trillion won, and the TV (VD) and home appliance (DA) divisions would have recorded a deficit of around 500 billion won due to the burden of the surge in prices of semiconductors and core components.

In this situation, Samsung Electronics established a strategy to overcome the crisis with two main principles: AI transformation and business fundamental improvement.

Externally generated AI was introduced into work for the first time, and it was decided to convert domestic and overseas production plants into AI autonomous factories by 2030.

In order to liquidate low-profitability businesses and focus on core competencies, the company stopped selling TVs and home appliances in mainland China last May.

They are concentrating their capabilities on premium products while discontinuing production of low value-added home appliances or switching to outsourcing.

Recently, we opened 'My Skills', a career platform that analyzes the capabilities of each employee by 'skill' and supports growth.

Through this, employees can develop their capabilities while also exploring new career opportunities that suit them within the company.

An industry insider said, "Domestic home appliance companies are allowing Chinese companies to catch up amidst unprecedented cost burden and geopolitical uncertainty," but added, "Only a bold change in strategy and improvement in fundamentals will be the way to turn the crisis into an opportunity."