S&P Downgrades Credit Rating Outlook for LG Chem and LG Energy Solution to 'Negative'

"Battery Market Slowdown... Burden of Aggressive Investment"

The credit rating outlooks for LG Chem and LG Energy Solution have been downgraded. It is anticipated that aggressive facility investments will act as a financial burden.

According to industry sources on the 29th, credit rating agency S&P Global downgraded the credit rating outlooks for LG Chem and LG Energy Solution from 'Stable' to 'Negative'. The long-term issuer credit rating and bond rating of 'BBB+' were maintained.

S&P Global predicted, "Due to aggressive investments in LG Chem's electric vehicle battery-related business, the debt-to-EBITDA ratio is expected to rise from 1.5 times in 2022 and 2.4 times in 2023 to 2.6?2.8 times in 2024?2025." Additionally, it forecasted that the petrochemical business environment is likely to remain challenging.

LG Energy Solution's debt-to-EBITDA ratio is expected to increase from 1.5 times last year to 2.5?2.6 times in 2024?2025.

S&P Global stated, "Along with large-scale facility investments, the slowdown in electric vehicle battery demand growth will pose a burden on LG Energy Solution. Although LG Energy Solution's position in the U.S. market is relatively stable due to high entry barriers, it will likely take some time for the expansion of production at its U.S. plants to fully offset the slowdown in other regions."

S&P Global warned that if LG Chem's debt-to-EBITDA ratio exceeds 2.5 times for a considerable period, it may downgrade the credit ratings of both LG Chem and LG Energy Solution.