Moody’s Investors Service upgraded LG Electronics' credit rating outlook from “stable” to “positive” on Tuesday, marking the first change in the company's credit outlook in four years.

Compared to a “stable” outlook, which suggests a company's rating is unlikely to change, a “positive” outlook indicates a greater likelihood of a future credit rating upgrade.

“The adjustment is based on LG Electronics’ global brand presence, leading market position, and high business and geographic diversification,” Moody’s stated. “Despite rising uncertainties, such as tariff hikes and weak demand for certain products, the company is expected to maintain stable profitability.”

Moody’s also attributed the upgrade to financial improvements at LG Display, in which LG Electronics holds a 36.72 percent stake. The agency stated that this could lead to improved equity method profits while reducing potential financial risks associated with the subsidiary.

Additionally, while LG Electronics’ planned initial public offering of its Indian subsidiary is not yet reflected in the credit outlook, Moody’s suggested that it could strengthen the company’s financial position in the future. The company submitted a preliminary application to the Indian Securities and Exchange Board last year to list the subsidiary and sell a 15 percent stake.

By Chung Hye-lim (hyelimchung@heraldcorp.com)