Fitch rates LG Electronics BBB-

Fitch Ratings said it assigned a BBB- long-term foreign-currency issuer default rating to South Korea-based LG Electronics.

The outlook is stable.

The agency said the rating reflects LG Electronics' well-established market positions in the global consumer electronics industry, its improved product portfolio diversity and its stable financial management capabilities. The company's product portfolio has also become more balanced over the years, including both growth products such as liquid crystal display plasma display panel and mobile handsets, as well as stable home appliances. Net debt to EBITDA improved to 2.1x at the end of 2005 from 3.5x in 2001.

Nevertheless, Fitch pointed out that the heavy dependence of LG Electronics' earnings and cash flow on LCD and handset products is a credit concern, because the high speed of product migration and intensifying competitive pressure in the LCD and handset markets could cause volatility in LG Electronics' cash flow, which could be further pressured by the substantial capex requirement of the LCD business.

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