Compensation General Motors $1.9 billion LG Chemical profits fell 20% in the third quarter

According to foreign media reports, South Korea's LG Chemical Company released its third-quarter results on October 25th. Third-quarter profit fell 20 per cent as LG Chemical accounted for part of the cost of GM's recall of Bolt electric vehicles in the third quarter.

According to a report released by LG Chemical, the company's third-quarter sales were 10.6 trillion won, up 41% from a year earlier. Operating profit in the third quarter was 727 billion won ($618 million), compared with 904 billion won in the same period last year, down 19.6% from a year earlier. It was also below the average forecast of 893 billion won by Refinitiv SmartEstimate analysts.

In early October, LG Chemical said GM had claimed compensation for the recall of its Bolt electric vehicle over a fire caused by a defective battery and reached a $1.9 billion compensation agreement for the Bolt recall fee. LG Chemical has included recall-related costs of about 620 billion won ($517 million) in its third-quarter results.

LG Chemical Battery subsidiary LG Energy Solutions (LG Energy Solution,LGES) is preparing for an initial public offering of (IPO), but GM's expansion of the recall has affected LGES's IPO process, and the payment paves the way for LGES to resume its shelved IPO plan.

As global carmakers invest billions of dollars to accelerate the transition to low-emission cars and prepare to phase out internal combustion engine cars, LGES hopes to expand its development with soaring battery demand.

LGES also supplies Tesla and Hyundai. Last week, the company also reached an agreement with Stellantis to co-produce batteries for electric vehicles.

LG Chemical CFO car Dongxi said on the third quarter results: "although the internal and external situation is not clear, if the occasional factors are excluded, the company's sales and profit growth trend will not change."

He also pointed out: "the company should focus on the development of environmental protection and sustainable development business, further expand the battery materials business, and become a sustainable development enterprise."

LG Chemical shares closed up 0.4 per cent, while South Korea's (KOSPI) composite index rose 0.5 per cent.