LG Group plans to continue its share cancellation policy next year as well, following this year, to boost shareholder value.
On the 28th, eight listed companies of LG Group — LG Corp., LG Electronics, LG Display, LG Innotek, LG CHEM, LG Energy Solution, LG H&H, and LG Uplus — simultaneously disclosed their "status of implementing the corporate value enhancement plan" and announced next year's share cancellation plans. LG Group put forward share cancellations, improvements to its dividend policy, and additional shareholder returns to carry out its corporate value enhancement plan.
◇ LG Group cancels 500 billion won worth of treasury shares this year… more cancellations next year
Affiliates including LG Corp., the holding company of LG Group, canceled about 500 billion won worth of treasury shares this year. LG Corp. canceled 3,029,580 shares in September, which is half of its roughly 500 billion won in treasury shares. LG Electronics, LG H&H, and LG Uplus also successively canceled a total of 250 billion won in treasury shares this year.
LG Group plans to continue its share cancellation policy next year as well. LG Corp. plans to cancel all remaining treasury shares (3,029,581 shares), worth 250 billion won, by the first half of 2026. LG Electronics plans to cancel all remaining treasury shares it currently holds (1,749 common shares and 4,693 preferred shares) after approval at next year's shareholders meeting. LG H&H also plans to cancel all common and preferred shares worth 200 billion won by 2027.
Share cancellation is the permanent retirement of a company's treasury shares. Canceling treasury shares reduces the number of shares outstanding, increasing earnings per share (EPS), making it one of the shareholder return measures along with dividends. An LG official said, "The method and timing of shareholder returns will be decided later by the board of directors, and we plan to communicate further with the market."
LG Group said it also carried out improvements to its dividend policy and implemented interim dividends as planned. LG Corp. achieved a 76% payout ratio based on last year's separate adjusted net income, in line with its plan to raise the minimum payout ratio by 10 percentage points to 60% from the previous 50%.
LG Electronics increased the dividend amount from 144.9 billion won in 2023 to 180.9 billion won in 2024 in line with its policy to pay out at least 25% of consolidated net income as dividends, and is expanding dividends by paying about 90 billion won as an interim dividend in 2025. LG Innotek plans to raise it to 15% by 2027 and 20% by 2030. LG Uplus is pursuing a mid- to long-term plan to achieve a shareholder return rate of up to 60%.
LG Corp., LG Electronics, LG Uplus, and LG H&H have also implemented interim dividends, establishing a twice-a-year dividend system. LG Corp. paid a total of about 154.2 billion won in September through an interim dividend of 1,000 won per common and preferred share.
LG Corp. will also use the after-tax proceeds of about 400 billion won from the sale of the Gwanghwamun Building for shareholder returns and future preparation. An LG official said, "CEO Koo Kwang-mo of LG Corp. plans to expand investment centered on the ABC (AI, bio, cleantech) areas selected as future growth engines, and we will review flexibly using part of the funds for shareholder returns."
◇ Efficient resource allocation and expanded shareholder returns… aiming to improve return on equity
LG Group plans to raise its return on equity (ROE) over the mid to long term through efficient resource allocation and expanded shareholder returns. Return on equity is a representative profitability indicator that shows how much profit a corporation generated with its own capital, calculated by dividing net income by total equity.
LG Corp. also plans to maintain its goal of achieving an 8%–10% return on equity in 2027 through efficient resource allocation and expanded shareholder returns. To that end, LG Corp. will strengthen its mid- to long-term competitiveness by enhancing profitability through results in the ABC (AI, bio, cleantech) areas, advancing affiliates' business portfolios, and improving financial structure efficiency.
By affiliate, ROE targets are: LG Electronics at 10% or higher by 2027; LG Innotek at 15% or higher by 2030; LG CHEM (excluding LG Energy Solution) at 10% or higher by 2028; and LG Uplus at 8%–10% over the mid to long term.
LG Energy Solution will maintain its existing goal of doubling sales by 2028 compared with 2023 and achieving a mid-10% EBITDA margin (excluding North American production subsidies). LG Energy Solution will focus on generating stable free cash flow and securing funds for potential shareholder returns by pursuing selective investments, optimizing line operations, rebalancing the portfolio through expansion of the energy storage system (ESS) business, and improving profitability by strengthening cost competitiveness.
LG Display is expected to swing to an operating profit and net profit in 2025. LG Display achieved ahead of schedule its goal to reduce borrowings to the 13 trillion won range. LG Display said, "This is the result of visible achievements from OLED-centered restructuring," adding, "Over the mid to long term, we plan to continue strengthening structural competitiveness through profit-focused business operations and upgrading technological capabilities, while persistently reducing borrowings and improving financial ratios."
In addition, LG Corp. decided that day to newly establish a compensation committee within the board of directors. The move aims to secure procedural legitimacy in executive pay and meet market expectations for protecting shareholder interests. The compensation committee will consist of three members, with a majority of outside directors, and the Chairperson will also be appointed from among the outside directors to secure independence and objectivity.