SEOUL (Reuters) – South Korea’s LG Chem Ltd posted a 20% fall in quarterly profit on Monday, hurt by a one-off expense associated with the recall of General Motors (NYSE:GM)’ Bolt electric vehicles.
It reported an operating profit of 727 billion won ($617.55 million) for the July-September period, versus 904 billion won a year earlier and an average analyst forecast of 893 billion won compiled by Refinitiv SmartEstimate.
Earlier this month, LG Chem, which has the full ownership of electric battery unit LG Energy Solution, said it would take a charge of 620 billion won in its third quarter results in connection with GM’s Bolt recall due to the risk of fire caused by rare battery defects.
Revenue rose 41% to 10.6 trillion won, LG Chem said in a regulatory filing.
LG and GM settled a $2 billion Bolt recall cost deal earlier this month, paving the way for its battery unit to resume work on its suspended initial public offering.
LG Energy Solution is hoping to a ride a boom in soaring battery demand, as global automakers are investing billions of dollars to accelerate a transition to low-emission mobility and prepare for a progressive phase-out of internal combustion engines.
The company, which also supplies Tesla (NASDAQ:TSLA) Inc and Hyundai Motor Co, struck a deal last week with Stellantis NV to jointly produce EV batteries.
Shares of LG Chem closed up 0.4%, versus the KOSPI‘s 0.5% rise.
($1 = 1,177.2300 won)