LG Electronics is going to follow in the widespread trend ofbelt tightening after revealing plans to cut costs by 30% to counter continueddrops in demand.
The announcement follows a couple of weeks after the first net loss in seven quartersat the company for its fourth quarter with falling sales of flat panel TVs andlower margins on mobile handsets being blamed.
The company said it was going to look to make savings “inits procurement system, which includes everything from raw materials toinvestment in facilities, financial services and recruitment.”
In a statement, LGE CEO Yong Nam said that it would increaseinvestment in R&D, marketing, branding and design.
“The poor performance of many global companies in the lastquarter of 2008 was a wake-up call that we needed to take drastic actions, notjust safe ones,” he said.
The vendor established a crisis war room, with representativesfrom all divisions, at the end of last year and out of that initiative thecompany is coordinating its cost saving programme.
The net loss for the fourth quarter, announced last month, was $493m and wasaccompanied by an operating loss of $228m despite an increase in sales andoperating profit of 22.5% and $74.16m.
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