Seoul: S and P Global Ratings announced that it has raised its outlook on LG Electronics Inc. to "positive" from "stable," citing the company's potential to enhance its financial strength in the coming years.

According to Yonhap News Agency, the global credit appraiser upgraded LG Electronics' BBB credit rating outlook on Tuesday. This marks the first upgrade in three years since October 2022. Earlier in the year, Moody's Investors Service also raised its outlook on LG Electronics to "positive."

S and P forecasts that LG Electronics will generate strong cash flow due to consistent earnings from its home appliance segment and a recovery at its affiliate, LG Display Inc. The company is also expected to reduce its debt after securing over 1.8 trillion won (approximately US$1.26 billion) from the stock market listing of its Indian subsidiary.

S and P highlighted LG Electronics' position as a leading maker of premium home appliances, noting its ability to maintain stable margins despite economic challenges. The company's HVAC business is expanding rapidly, driven by increased demand for data center cooling and energy-efficient systems.

Additionally, LG Electronics' vehicle solutions division is anticipated to achieve higher profits, backed by an order backlog of roughly 100 trillion won as of the end of June.

S and P further predicted that the anticipated turnaround at LG Display will bolster LG Electronics' financial position. Following its exit from the LCD business earlier this year, LG Display is projected to return to profitability by 2025 with the growth of organic light-emitting diode (OLED) panel sales.