S&P Global Ratings confirmed on Wednesday that it has maintained the credit rating of South Korea's LG Electronics at “BBB” and upgraded its rating outlook from “stable” to “positive,” indicating a potential improvement in the company's financial strength over the next few years.

This marks the first time since October 2022 that S&P has upgraded LG Electronics' rating outlook in three years. Earlier this year, Moody's also raised LG Electronics' rating outlook to “positive.”

S&P highlighted that LG Electronics is expected to generate robust cash flow, driven by stable earnings from its home appliance segment and a return to profitability at its subsidiary LG Display.

The company's debt is anticipated to decrease following the listing of its Indian subsidiary, which raised 1.8 trillion Korean Won (approximately $1.26 billion).

Furthermore, S&P emphasized that LG Electronics remains one of the world's leading home appliance companies, sustaining stable profit margins even amidst economic instability. The report noted the rapid growth of its heating, ventilation, and air conditioning (HVAC) business, spurred by increasing demand for data center cooling and energy-efficient systems.

Additionally, LG Electronics' automotive solutions division is expected to benefit from higher profits, bolstered by an order backlog of about 100 trillion Korean Won as of the end of June.

S&P also projected that the improving performance of LG Display will provide support to LG Electronics' financial strength. Following its exit from the LCD business earlier this year, LG Display is expected to return to profitability by 2025 as OLED panel sales increase.