Moody's Upgrades LG Electronics' Credit Rating to Baa1: "Debt Expected to Decline"

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On January 29, LG Electronics announced that international credit rating agency Moody's has upgraded its credit rating from Baa2·Positive to Baa1·Stable. This is the first time in five years since 2021 that Moody's has raised LG Electronics' credit rating.

Moody's explained, "Last year, LG Electronics' key financial indicators improved, and further improvement is expected over the next one to two years as performance rebounds, which led to the credit rating upgrade." Moody's also added that the improved performance of LG Display, in which LG Electronics holds a 36.7% stake, contributed to the upgrade.

Moody's further projected that LG Electronics' debt-to-EBITDA ratio would decrease from 2.4 times in 2024 to around 2.1-2.2 times last year. With continued profitability improvements and debt reduction, the ratio is expected to improve further to 1.7-1.9 times within the next one to two years.

Moody's analyzed, "Net debt is expected to decrease due to the sale of shares through the IPO of the Indian subsidiary and the recovery of loans from LG Display, and debt levels are expected to decline even further over the next one to two years."

Moody's also stated, "Through geographically diversified sales and production bases and pricing strategies, LG Electronics will mitigate the impact of U.S. tariffs, and in the long term, by increasing the proportion of non-consumer goods and subscription businesses, the company will gradually strengthen its resilience to economic fluctuations."

Meanwhile, in October last year, international credit rating agency Standard & Poor's (S&P) also upgraded its outlook on LG Electronics' credit rating by one notch, from BBB Stable to BBB Positive.

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