International credit rating agency Moody's on the 29th upgraded LG Electronics' credit rating to Baa1, Stable from Baa2, Positive. Moody's said it raised the rating "as key financial metrics improved last year and further improvement is expected with a rebound in results over the next one to two years," adding that "the performance improvement at affiliate LG Display, in which LG Electronics holds 36.7% equity, also had an impact."
It is the first time in five years since 2021 that Moody's has upgraded LG Electronics' credit rating. In Feb. last year, it raised LG Electronics' rating outlook to Positive from Stable.
Moody's expected LG Electronics' debt ratio to EBITDA to fall from 2.4 times in 2024 to 2.1–2.2 times in 2025. It also projected that continued profitability gains and liability reduction would improve the ratio to 1.7–1.9 times within the next one to two years.
Moody's said, "As net debt is expected to decline through stock sales via an initial public offering (IPO) of the India subsidiary and the recovery of LG Display lending, the liability level will decrease further over the next one to two years," adding, "Considering efforts to improve the TV business and base effects from one-off expenses last year, LG Electronics could also recover profitability within the next one to two years."
It added, "Through a geographically diversified sales and production base and pricing strategy, it will reduce the impact of U.S. tariffs and, in the long term, gradually strengthen resilience to economic cycles by increasing the share of non-consumer goods and subscription businesses," and projected, "It is laying the groundwork for growth in AI- and robotics-based home appliances, cutting-edge auto parts, and data center cooling."
In Oct. last year, international credit rating agency Standard & Poor's (S&P) also raised LG Electronics' credit rating outlook by one notch to BBB Positive from BBB Stable.