LG Booming, As Moody Ramps Up Rating On Expectation Of Mobile Market Exit
COVID-19 has been kind to LG Electronics with global rating agency Moody’s jacking up the South Korean Companies credit ranking over the weekend, after the business recently reported record earnings and the prospect of it getting out of the mobile phone market.
Moody’s raised the ratings of LG Electronics to Baa2 from Baa3, with its ratings outlook remaining “stable.”
This is the first time since February 2014 that Moody’s has revised up its rating for LG Electronics who are witnessing a boom in demand for TV’s and appliances.
Last month it emerged that LG was looking to get out of the smartphone market however they are set to continue manufacturing components for smartphones including OLED display screens for Apple.
“The upgrade reflects our expectation that, following a significant improvement in 2020, LG Electronics’ (LGE) financial profile will remain solid over the next 1-2 years, driven by its steady sales and profitability, and the improved operating performance of its 37.9 percent-owned affiliate LG Display said Gloria Tsuen, a Moody’s vice president and senior credit officer.
“The new rating reflect its well-recognized brand and strong market positions in the global home appliance and TV segments, as well as its healthy balance sheet.”
LG Electronics last year delivered US$57 billion in sales and an operating profit of $3.1 Trillion Won both record highs in the company’s history.
Moody’s said LG Electronics’ earnings and business profile are likely to further improve if the company is able to exit its mobile business.
LG Electronics’ mobile business has been in the red since the second quarter of 2015. With its accumulated operating loss reaching nearly 5 trillion won, the company recently said it will closely review the direction of its mobile business.