Dear shareholders and advertisers!
On behalf of all the employees of GIIR, I would like to extend my sincerest appreciation to you for your unwavering support for GIIR and its affiliates.
Although both the domestic and global economies became even more deeply mired in low growth throughout 2016, GIIR and its subsidiaries HS Ad and LBEST achieved their best-ever performance as a result of playing fair and square with creative ideas.
Billings in advertising totaled KRW 1.4761 trillion, a 10.5% increase from the previous year, marking uninterrupted net growth for a seventh consecutive year. Our gross margin rose 7.3% over the previous year to a record KRW 144.6 billion. Operating income also rose sharply, thanks to the increase in the gross margin and improved operational efficiency.
This outstanding result was possible thanks to the acquisition of new leading advertisers in each sector, including Kyung Dong Navien, Shinsegae Duty Free, the Ministry of Health and Welfare, Binggrae, Korean Committee for UNICEF, Yanolja, KB Card, KB Capital, SRT, Winche, Megagen Implant, and Net Marble and the efforts to increase the profit of foreign subsidiaries in emerging markets including India and Southeast Asia as well as in North America, the global center of high-end markets.
We also gained valuable experience in global B2B events by showcasing the electronic equipment business and digital signage business of LG Electronics overseas. We successfully carried out integrated space planning for LG Science Park, a state-of-the-art R&D complex newly created by LG.
News of winning prestigious awards continued throughout the year. In recognition of its superb advertising production capability with the “Ssuk” ad campaign for SSG.COM, HS Ad was dubbed the “Agency of the Year 2016” at the Seoul Creative Festival. At the Korea Advertising Awards, the most prestigious advertising award ceremony in Korea, we received three grand prizes with ad campaigns for LG Electronics and Korean Air and made the splendid achievement of winning the grand prizes for six consecutive years.
Our ad creatives were also recognized overseas. The “Remedies for the Soul” vending machine campaign jointly initiated by HS Ad and Seoul Foundation for Arts and Culture was honored by being awarded both a Silver Lion and a Bronze Lion in the Pharma section of the Lions Health of the 2016 Cannes Lions International Festival of Creativity.
Dear shareholders! The IMF forecasts 3.4% global economic growth this year and cited protective trade policy, financial uncertainties in Europe and some emerging markets, and the more serious than expected slowdown of the Chinese economy as restraining factors. On top of these, Korea now faces political uncertainties and a domestic recession. Domestic growth is forecast at only about 2% for an unprecedented third consecutive year.
Despite the challenging business environment, we will initiate the advancement of our business portfolio in Korea and the expansion of our global business this year in order to repay the shareholders for their firm belief.
In particular, DMC (Digital Marketing Center), newly created last year for digital marketing business in Europe, is expected to provide services to advertisers in full scale beginning this year. We also plan to establish new bases in promising markets, including Vietnam and Mexico.
The advent of the fourth industrial revolution throughout the world is expected to fundamentally change your daily lives and corporate business by means of ICT (Information and Communications Technologies) and AI technology. Therefore, we will also focus on implementing hybrid solutions in a true sense that realizes O2O (online to offline) marketing by organically combining online and offline.
Dear shareholders and advertisers!
As an LG affiliate, we rigorously practice Jeong-do Management, which values basics and principles. Going forward, we will continue to strive to become a company that is trusted and valued by shareholders and society at all times. Please continue to render your unwavering support for the efforts made by GIIR. We appreciate your unstinting support and advice.
March 17, 2017
* From the greetings at the general shareholders’ meeting in 2017