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LGI achieves a double success in profitability and growth
Date : 2020-02-10 | View : 4,433

LGI achieves a double success in profitability and growth

– trying to accomplish performance improvements

 

- Selling the shares of LG Beijing Twin Towers at a price of about 341.2 billion won… Securing large scale financial resources for new investment

- Improvements in financial stability through continuous asset management efficiency… Put the brakes on this year’s performance improvements

- Expansion of the profits from the existing energy business… Promoting growth with new businesses through the nickel, ICT platform/solutions, etc.

 

By selling all of the shares of LG Beijing Twin Towers, LG International has prepared the financial resources for new investment. Including the recent shares sale, LGI has secured a favorable level of financial stability through its continuous efforts in financial structure improvements, and it further plans to spur for achieving performance improvements in 2020 by focusing on business profitability and growth.

 

■ Selling all of its 25% share in LG Beijing Twin Towers… Further improvements in financial stability

On February 10, LGI held a meeting with the board of directors and decided to sell its entire 25% share in LG Beijing Twin Towers at about 341.2 billion won.

Situated near Tiananmen Square in China, LG Beijing Twin Towers were completed in 2005. It is an office building comprised of a total area of 15,280m2 that is divided into two 31-floor and 4-underground floor buildings. A 100% share of LG Beijing Twin Towers is held by the LG Holdings (HK) Ltd.

A member from LGI discussed “The outcome of the shares sale will be used as financial resources for our new investments so that the company can accelerate the business promotion.” Also, he took the opportunity to expand on that by saying, “It would be also possible to expect positive effects in terms of the financial structure improvement that is followed by the reinforcement of the asset management efficiency and securement of the cash flow.”

In 2019, LGI raised 10 trillion and 530.9 billion won as sales and 134.8 billion won as business profit. Although it experienced a rough time last year due to the fall in the resource price and the termination of the existing contract project business, it has enhanced the financial stability by reducing the percentage of the loan through the shares sale of non-operating assets such as LG Twin Towers, etc.

 

■ Striving to accomplish performance improvement in 2020… Preparation of the basis for growth by making profits from the energy business and carrying out new businesses

This year, LGI will begin to create a valid momentum for performance improvement. It has established a strategic keynote that states that it would minimize the exposure to risk that occurs from the fluctuation of the resources market conditions and that it will advance the business structure and stabilize the portfolio in the solutions business.

In order to achieve its goal, LGI will first maximize the operational efficiency of the palm plantations for the profit improvement of the palm business, and through this, it aims to expand the palm oil output and the quantity of trading. The annual production standard of the palm oil and the quantity of trading in 2020 are 200,000 tons and 320,000 tons respectively, which have increased by 33% and 78% each compared to that of the previous year.

LGI predicts that its contribution to the palm business profit would further increase as it actively examines the additional acquisition of new palm plantations this year and due to the recent favorable price of the palm oil.

Furthermore, LGI stated that it will increase the annual output of the GAM coal mine in Indonesia up to about 10 million tons this year. This production amount is increased by 32% compared to that of the previous year, and it is expected that the maximum annual output will reach about 14 million tons by 2022.

The Wantugou coal mine in China will also raise the amount it actually produces. Regarding this coal mine, LGI plans to achieve more than 2 million tons of annual output, which is more than triple the amount of last year’s output. If the new coal bed that is currently being developed is finished by the end of this year, it will be possible to produce 5 million tons annually starting from next year.

A sharp rise in the quantity of coal trading is expected as well. The reinforcement of the coal trading business is a strategic plan that was established after considering the fact that it will be able to create a stable profit even in the case of the coal price fluctuation after making investments in coal development. For this project, LGI will devote all of its strength to achieve 21 million tons that will mark an increase of 6 million tons compared to last year through the diversification of the coal suppliers and sales areas.

For the new strategic businesses, LGI will focus on working on the nickel mine development business in Indonesia based on its capabilities in mine development and operation. Together with the business that secures the off-take of the nickel mine where the nickel is processed as the key base material of secondary batteries, LGI will focus on preparing future growth engines.

In the meantime, LGI plans to continuously seek new business opportunities by developing various business platforms and solutions that are necessary for the development of the ICT-based (Information and Communication Technologies) fourth industry. Also, there’s a high chance of making developments in the logistics field by LGI. Last but not least, a member from LGI stated that company-wide efforts have been carried out to secure the foundation for continuous growth and that they will also secure both the profitability and growth of the company throughout this year.