SEOUL — LG Electronics, a global leader in technology and innovation, announced a significant acceleration of its corporate value enhancement plan, committing an additional KRW 200 billion (approximately $154 million) towards shareholder returns over the next two years. The company further signaled its dedication to shareholder value by declaring the complete cancellation of its remaining treasury shares.
The announcement came through a public disclosure on November 28, detailing the implementation status of its corporate value enhancement plan initially unveiled last year. The move underscores LG Electronics' commitment to transparent communication with the market regarding its progress and future strategic direction.
Financial Health and Qualitative Growth
LG Electronics' disclosure highlighted substantial improvements in its financial structure. The consolidated accumulated revenue for the third quarter reached KRW 65.3 trillion, marking a modest 0.5% increase year-over-year. While the operating profit margin saw a slight decrease of 1.1 percentage points to 4.0%, the company's financial indicators reflected notable gains in efficiency.
Significantly, the Return on Equity (ROE) as of the end of the third quarter surged to 8.3%, a substantial 6.5 percentage point increase compared to the end of the previous year. Simultaneously, the debt ratio and borrowing ratio demonstrated improved fiscal health, decreasing by 10 percentage points and 8 percentage points, respectively. The company attributed this improvement to rigorous management efficiency and optimized working capital practices.
Furthermore, LG Electronics showcased strong performance in strategically nurtured 'qualitative growth' areas—sectors vital for the structural improvement of its business portfolio. These areas, including Business-to-Business (B2B) segments like Vehicle Components and Heating, Ventilation, and Air Conditioning (HVAC), non-hardware domains such as the webOS platform, and Direct-to-Consumer (D2C) channels like LGE.COM, now collectively account for 45% of total sales and an impressive 91% of operating profit as of the end of the third quarter.
Enhanced Shareholder Return Policy
The new, two-year, KRW 200 billion shareholder return initiative marks a key step in fulfilling the company's long-term value-up strategy. The specific methods and timing for this return will be determined by future board resolutions.
Crucially, LG Electronics plans to retire all of its outstanding treasury shares—totaling 1,749 common shares and 4,693 preferred shares—following approval at next year's general shareholders' meeting. This action follows the earlier cancellation of 761,000 treasury shares acquired within the scope of distributable profits, which was executed under the previous shareholder return plan. The cancellation of treasury stock is widely regarded as a key shareholder-friendly measure, as it reduces the number of shares in circulation, thereby boosting earnings per share (EPS).
LG Electronics reaffirmed its dedication to an unwavering shareholder value enhancement policy, stating that it will "continue to pursue policies that seek an optimal balance between shareholder return and growth investment from a mid- to long-term perspective."
In addition to these financial measures, the company announced the planned establishment of a Compensation Committee under the board of directors, to be chaired by an outside director. This governance improvement is designed to enhance the fairness and transparency of executive compensation.
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