Standard & Poor's (S&P), one of the three major global credit rating agencies, has upgraded LG Electronics' (066570.KS) credit rating to BBB+ from BBB. It marks the first time in about 12 years that S&P has raised LG Electronics' credit rating.
According to industry sources on Wednesday, S&P upgraded LG Electronics' credit rating by one notch the previous day. The rating outlook was changed from positive to stable. A positive outlook leaves open the possibility of further rating upgrades in the future.
S&P said it "judged that the debt burden will ease and the financial structure will improve based on the stable growth trajectory of its core businesses." The agency also explained that "the stable outlook reflects expectations that LG Electronics' core business competitiveness will translate into solid free cash flow generation and debt reduction."
S&P assessed that the competitiveness of LG Electronics' premium products is improving. It also projected that the company will continue to deliver solid earnings over the next two years as its subscription and business-to-business (B2B) operations expand. The agency further analyzed that replacement demand for premium products, including large organic light-emitting diode (OLED) TVs, will underpin growth, and that the webOS platform-based business will also expand, supporting continued earnings improvement at LG Electronics.
For the automotive electronics business, S&P assessed that sustained growth and profitability improvement are achievable based on the strong market position secured in key product categories such as telematics and infotainment.
S&P said, "Debt will continue to decline under a strict financial policy," adding that "LG Electronics' debt-to-EBITDA ratio is expected to fall from 1.6 times in 2025 to 1.2 times in 2026 and to around 1.0 times in 2027."
Meanwhile, global credit rating agency Moody's also upgraded LG Electronics' credit rating by one notch from Baa2 to Baa1 in January this year, while changing the rating outlook from positive to stable. Last month, Korea Investors Service raised LG Electronics' credit rating outlook to "AA positive" from "AA stable."
