LG Electronics is going to follow in the widespread trend of belt tightening after revealing plans to cut costs by 30% to counter continued drops in demand.
The announcement follows a couple of weeks after the first net loss in seven quarters at the company for its fourth quarter with falling sales of flat panel TVs and lower margins on mobile handsets being blamed.
The company said it was going to look to make savings “in its procurement system, which includes everything from raw materials to investment in facilities, financial services and recruitment.”
In a statement, LGE CEO Yong Nam said that it would increase investment in R&D, marketing, branding and design.
“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,” he said.
The vendor established a crisis war room, with representatives from all divisions, at the end of last year and out of that initiative the company is coordinating its cost saving programme.
The net loss for the fourth quarter, announced last month, was $493m and was accompanied by an operating loss of $228m despite an increase in sales and operating profit of 22.5% and $74.16m.