A company statement said: “LG will continue to invest in future growth engines such as solar power, commercial air conditioners and business to business solutions, all sectors LG expects will expand and become increasingly profitable once the economy is back on track.”
LG chief executive Yong Nam said the company was looking for major cost cutting, but would not reduce – and could even increase – its investment in Research and Development, marketing, branding and design.
He said: “Every company –- not just LG -- has been affected negatively by the economic downturn. The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones.”
LG is targeting a reduction in expenses of 3 trillion South Korean Won – the equivalent of £1.5billion - in 2009. Globally, LG has been looking to improve its procurement system, which includes everything from raw materials to investment in facilities, financial services and recruitment.
LG’s has already put in place measures to reduce inventory, increase liquidity, optimise supply chain management and introduce a more efficient purchasing process.
Due to the weakness of the South Korean currency – the won – LG has not been hit as hard as Japanese electronic giants Panasonic, Hitachi and Mitsubisihi Electric. However, it still saw sales in US dollars drop 20 per cent in the fourth quarter and is seeing a year on year decline in exports.with profits slipping due to low demand and increasing price competition.