LG Electronics has received a credit rating upgrade from Moody's for the first time in five years. Global credit rating agency Moody's said on Thursday it raised LG Electronics' credit rating to Baa1 from Baa2. It also changed the outlook to stable from positive.

Moody's last upgraded LG Electronics' credit rating in 2021. Moody's said it raised the rating as key financial indicators improved last year and further improvement is expected over the next 1 to 2 years on an earnings rebound. It added that improving results at affiliate LG Display, in which LG Electronics holds a 36.7 percent stake, also had an impact.

Moody's expects LG Electronics' debt-to-EBITDA ratio to fall to around 2.1 to 2.2 times in 2025 from 2.4 times in 2024. It forecast the ratio will improve to 1.7 to 1.9 times over the next 1 to 2 years on sustained profitability gains and lower debt. It analysed that net debt is expected to decline through a share sale via the India unit's IPO and the recovery of loans to LG Display.

Moody's said it expects profitability to recover over the next 1 to 2 years, factoring in efforts to improve the TV business and base effects from one-off costs incurred last year. It forecast a geographically diversified sales and production base and pricing strategy will reduce the impact of U.S. tariffs.

Moody's said that in the long term LG Electronics will gradually strengthen its resilience to economic fluctuations by increasing the share of non-consumer goods and subscription businesses. It forecast the company is laying a foundation for growth in AI- and robotics-based home appliances, advanced vehicle components and data centre cooling.

With the latest upgrade, LG Electronics received positive assessments from both of its two major global credit rating agencies. In October last year, global credit rating agency Standard & Poor's also raised its outlook on LG Electronics' credit rating by one notch, to BBB Positive from BBB Stable.