Moody's downgrades outlook for LG Electronics

SEOUL, Feb. 13 (Yonhap) -- Credit appraiser Moody's Investors Services said Friday it has lowered its outlook for LG Electronics Inc., South Korea's second-largest electronics firm, citing the company's deteriorating profitability amid the global economic slump.

In a statement, Moody's said it downgraded the rating outlook for LG Electronics
to stable from positive on concerns over a rapid decline in global discretionary
consumer spending.
About US$1.1 billion worth of debt securities held by LG Electronics with a Baa3
rating are affected, the agency said.
"The severe drop in consumer spending in the U.S. and Europe has more than offset
the growth in developing countries," said Ken Chan, a senior analyst at Moody's.
"Higher marketing expenses, in response to the weak demand -- and falling average
selling prices continue to pressure margins; accordingly, the company's projected
credit metrics are more consistent with a low-Baa credit," the analyst said.
LG Electronics' recent indication that it may see a 20-percent sales drop in U.S.
dollar terms for 2009 clearly reflects the difficult operating environment, the
statement added.
In the final quarter of 2008, LG Electronics swung to its first net loss in seven
quarters due to steep price declines for signature products such as flat-screen
televisions and mobile phones.
During that quarter, LG Electronics posted a net loss of 671.3 billion won
($477.9 million) on sales of 6.6 trillion won, up 12 percent from a year earlier.
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