International credit rating agency Standard & Poor's (S&P) announced on June 2 that it has upgraded LG Electronics' credit rating from 'BBB (Positive)' to 'BBB+ (Stable).' This marks the first upgrade for LG Electronics since 2014, a span of nearly 12 years.
S&P stated, "The upgrade reflects expectations of debt reduction and improved financial structure due to solid growth in core businesses." The stable outlook indicates confidence that strong cash flow generation and debt reduction will continue, supported by the company's competitive edge in its main sectors.
S&P anticipates that LG Electronics' core businesses will achieve robust performance over the next two years, driven by enhanced competitiveness in premium products and expansion in subscription and B2B services.
In the home appliances sector, S&P expects stable profitability based on a strong position in the less cyclical premium market. The differentiated subscription services and brand image are seen as accelerating growth in emerging markets.
For the media entertainment solutions segment, S&P forecasts modest revenue growth over the next one to two years, supported by demand for premium products like large OLED TVs and expansion of the webOS platform.
The automotive business is expected to continue its growth and profitability improvements, bolstered by a strong market position in key product lines such as telematics and infotainment. A significant backlog of orders is projected to ensure stable revenue growth and enhance profitability through economies of scale.
This year, LG Electronics' automotive business backlog has surpassed 100 trillion won, demonstrating rapid growth. Recently, the company has strengthened global collaborations to secure a foothold in the future mobility market, including a partnership with Qualcomm to co-develop an AI-based 'AI Cabin Platform' and joining a 6G vehicle communication alliance.
S&P also predicts continued improvement in financial health, projecting that LG Electronics' debt ratio relative to EBITDA will decrease from 1.6 times in 2025 to 1.2 times in 2026, and further to 1.0 times in 2027.
Additionally, the performance and financial structure improvements of LG Display, in which LG Electronics holds a 36.7% stake, positively influenced this rating upgrade.
LG Electronics has received favorable evaluations from domestic and international credit rating agencies this year. In January, Moody's upgraded LG's credit rating from 'Baa2 (Positive)' to 'Baa1 (Stable).' Last month, Korea Credit Rating Agency also raised its outlook for LG Electronics from 'AA (Stable)' to 'AA (Positive).'
* This article has been translated by AI.
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