| An LG logo flag hangs outside the company's headquarters in western Seoul. (Newsis) |
S&P Global Ratings on Tuesday raised LG Electronics’ credit rating outlook from BBB stable to BBB positive, marking the first upgrade in three years.
The ratings agency said that the revision reflects robust performance in home appliances and automotive electronics, a large cash inflow from the initial public offering of its Indian subsidiary, and a turnaround at affiliate LG Display, in which LG Electronics holds a 36.72 percent stake.
Regarding the change in evaluation from stable to positive, S&P said it expected the company’s financial indicators to improve over the next one to two years, paving the way for another potential credit rating upgrade in the future.
S&P said, “LG Electronics’ main growth drivers include its resilient profitability despite external challenges such as the US tariff hike, a strong cash inflow from the IPO of its Indian subsidiary, and the turnaround of its affiliate LG Display.”
The agency also pointed to continued growth in the heating, ventilation and air conditioning segment, driven by data center cooling and energy-efficient solutions, as well as improved profitability in the vehicle component business, backed by a 100 trillion won ($69.94 billion) order backlog and an improved order mix.
The agency also noted that LG Display’s recovery and the 1.8 trillion won raised through the India IPO will strengthen LG Electronics’ balance sheet through debt reduction.
Earlier in February, Moody’s Investors Service similarly upgraded LG Electronics’ outlook from Baa2 stable to Baa2 positive, citing consistent performance and steady cash flow.
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