S&P Upgrades LG Electronics' Credit Rating Outlook to 'Positive' for First Time in Three Years

Large Cash Inflow from Indian Subsidiary's Listing
Improved Performance of LG Display, in Which LG Electronics Holds a Stake, Also Seen as Positive

International credit rating agency Standard & Poor's (S&P) has upgraded its credit rating outlook for LG Electronics to 'positive' for the first time in three years.

According to LG Electronics on October 22, S&P changed its credit rating outlook for LG Electronics from BBB stable to BBB positive the previous day. This is the first time S&P has adjusted its credit rating outlook for LG Electronics since October 2022. Earlier, in February, another international credit rating agency, Moody's, also upgraded LG Electronics' credit rating outlook from Baa2 stable to Baa2 positive.

Seoul Yeouido LG Twin Tower exterior. Photo by Kang Jinhyung

S&P's decision to upgrade the credit rating outlook to 'positive' reflects its view that, given LG Electronics' current business structure and financial status, there is a high possibility that the company will continue to improve its financial indicators and enhance its creditworthiness over the next one to two years. This is a more favorable assessment than the 'stable' outlook, which implies maintaining the current status for the time being.

S&P stated, "Despite challenging conditions such as increased tariffs in the United States, the solid performance of LG Electronics' core businesses, significant cash inflows from the listing of its Indian subsidiary, and the turnaround of LG Display are serving as growth drivers."

Specifically, S&P noted that the home appliance business has established a strong position in major markets based on stable profitability despite macroeconomic uncertainties, and that the heating, ventilation, and air conditioning (HVAC) business is being driven by growth in data center cooling solutions and high-efficiency solutions. Regarding the vehicle component solutions business, S&P analyzed that the company is significantly improving profitability through an order backlog of approximately 100 trillion won and an improved order mix.

Additionally, S&P projected that the improved performance of LG Display, in which LG Electronics holds a 36.72% stake and whose results are reflected through the equity method, will have a positive impact on the credit rating assessment. The 1.8 trillion won cash inflow from the Indian subsidiary's local stock market listing is also expected to lead to a reduction in debt.