LX Holdings, which has spun off from LG Group, on Monday held an inaugural event and board meeting to officially mark its business kickoff and name Koo Bon-joon as its first CEO and chairman.

The newly-launched business group is expected to exert all of its effort into phasing out of the LG brand in order to gain an independent position in the market.

“Today, we sail off under the name LX, hopeful, yet also a little tense, over what may be awaiting us down the road,” Koo was quoted as saying in an email address to employees.

He also called on staffers to “not to be afraid of changes,” reminding them that several of LX Group’s businesses already have a domineering position in the market.

Song Chi-ho, former CEO of LG International, also joined the holdings company as CEO, along with other executives coming from various key LG affiliates, officials said in a release.

“For this latest personnel appointment, we sought to select officials who may efficiently lay the foundation of (the new) holdings company, based on their high-profile experience in other LG affiliates,” an official of the company said.

Koo, 69, is the younger brother of late LG Group chief Koo Bon-moo and uncle of current LG Group Chairman Koo Kwang-mo.

Since starting his career in 1985 at GoldStar Semiconductor, which was the foundation of incumbent LG Electronics, Koo has served various top positions within the group over decades, including the CEO of LG Electronics.

When his nephew took the realm of LG Group, he took a step back from the managerial front lines and has remained low key for some three years, until returning recently as chief of the spunoff business group.

In November last year, LG Group announced the decision to separate some of its non-electronics affiliates, following a long tradition -- in which the eldest son of the group chief would inherit the management power while brothers of the chief spin off with their own business groups.

Having separated from the nation’s fourth-largest conglomerate with assets evaluated at 8 trillion won ($7.14 billion), LX Group is expected to rank the 52nd largest conglomerate here.

The group has five previous LG affiliates under its wing -- LG International Corp., LG Hausys Ltd., LG MMA Corp., Silicon Works Co., and Pantos Co -- which are all to be rebranded under the name of LX within the year. In the case of trading arm LG International, the corporate name will be changed to LX Global.

While the conventional LG Group largely pivots on two major pillars -- LG Electronics and LG Chem -- LX Group holds a more diverse portfolio that runs from trading, logistics, semiconductors, chemicals, and construction materials.

Of them, the key business unit will likely be LG International, which currently accounts a majority of LX Group, both in assets and yearly revenues. Benefiting from global trading volume recovery, increased freight charges and soaring demands for raw materials, the trading arm logged 113.3 billion won ($101 million) in quarterly operating profit for the January-March period, up 127.1 percent on-year and hitting a record-high figure for any quarter, according to regulatory filing unveiled last Friday.

As one of the nation’s top four trading companies, LG International finds its forte in its wide and diverse overseas network, as well as its 68-year history.

A point of observation, however, is that the trading firm’s conventional revenues have largely been dependent on the overseas sales of other LG affiliates, such as LG Electronics, LG Display, and LG Chem. Also, LG Pantos, a logistics agency affiliated with LG International, earned more than 70 percent of its revenue from LG affiliates last year.

It was under such awareness that LG International reviewed its articles of association to diversify the business purposes. Under new articles, LG International, or LX Global in the future, will be allowed to collect and transport waste materials, create digital contents, operate medical examination services and so forth.

The company also secured some 600 billion won in additional cash by disposing its overseas real estates in a gesture to expand investments into up-and-coming sectors such as secondary cell batteries.

Another blue chip for LX Group is Silicon Works, a local champion in the fabless manufacturing sector which achieved 1.16 trillion won in sales in 2020, joining the so-called the trillionaire club for the first time.

While the company is expected to prolong its uptrend on the back of semiconductor boom, its task will also be to reduce its heavy sales dependency on LG Display.

LG Hausys will continue to build on its construction material and interior business, while seeking opportunities to sell off its sluggish auto parts business.

By Bae Hyun-jung (tellme@heraldcorp.com)