LG Electronics won’t cut research and development, design, marketing or branding spend this year despite looking to cut 3 trillion won (US$2.2 billion) in expenses, it said Monday.
The company, South Korea’s second largest electronics group by sales, established a “crisis war room” in the final quarter of last year to cope with the sudden drop in demand seen in many sectors of the electronics industry.
During that quarter LG Electronics posted its first parent-company net loss in almost two years largely as a result of foreign-exchange losses and a slump in demand for LCD (liquid crystal display) panels.
“Every company, not just LG, has been affected negatively by the economic downturn,” Yong Nam, CEO of LG Electronics, said in a statement. “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.”
The cost savings targeted are company wide and include its headquarters and 82 subsidiaries around the world, it said.
Areas being targeted include its supply chain and procurement system, financial services and recruitment.
Additionally the company will continue to invest in areas where it sees potential for growth, including solar energy, commercial air conditioners and business-to-business systems, it said.
“These initiatives will enable LG to improve both growth and profitability over the long-term, regardless of the economic climate,” said Nam. “Becoming a stronger global brand will be a natural outcome of this effort.”