(C) The Investor

Lotte Group Chairman Shin Dong-bin has announced a major transformation in the group’s management strategy, shifting the focus from quantitative expansion to "quality-oriented growth" centered on profitability.

At the 2026 First-Half Value Creation Meeting (VCM) held today at Lotte World Tower, Chairman Shin urged CEOs of nearly 80 affiliates to fundamentally rethink their approach to business. The meeting, which took place in a somber atmosphere, addressed the group's slowing growth and the urgent need for a portfolio rebalancing.

A Shift to Profitability and ROIC
Chairman Shin emphasized that the era of chasing revenue growth is over. "We must transition to management based on profitability," Shin stated. He instructed leaders to prioritize Return on Invested Capital (ROIC) and efficient investment to build a foundation for sustainable growth and enhanced corporate value.

Strategic Rebalancing by Sector
The meeting outlined specific tasks for each business unit to strengthen competitiveness:

Food: Focused on enhancing the value of core brands.
Retail: Maximizing customer satisfaction through hyper-localized store strategies tailored to specific commercial districts.
Chemicals: Executing swift restructuring in line with government policies and advancing portfolios toward specialty products.

Breaking the Cycle of Complacency
A significant portion of Shin’s address was dedicated to organizational culture. Following the abolition of the HQ system in late 2025 to empower affiliate-centered responsible management, Shin called for faster and more proactive decision-making.

"We must beware of the arrogance that comes from past successes and the belief that 'we are different,'" Shin warned. "Unless we break away from what is familiar and move past old success formulas, we cannot solve the problems we face today."

He concluded the meeting by challenging CEOs to focus on the "essence of the business" and to take full responsibility for understanding and addressing evolving customer needs through rapid innovation.