Hyundai Motor Q2 top and bottom line a record on premium car demand, favorable FX

[Photo by MK DB]

South Korean auto giant Hyundai Motor Co. achieved best-ever quarterly top and bottom line in the quarter ended June despite headwinds from chip bottleneck and inflation-hit slowdown on strong demand for premium cars and favorable exchange rate.

In its regulatory filing on Thursday, Hyundai Motor reported an operating profit of 2.98 trillion won ($2.27 billion) for the second quarter, gaining 54.5 percent from a quarter ago and 58 percent from a year earlier. The income is the best quarterly record since new accounting system was adopted in 2010.

Net profit jumped 73.6 percent on quarter and 55.6 percent on year to 3.08 trillion won, and sales added 18.8 percent from three months ago and 18.7 percent from a year earlier to a quarterly best of 36 trillion won.

Operating margin reached 8.3 percent, up 1.9 percentage points from the previous quarter.

Hyundai Motor shares closed unchanged at 189,000 won in Seoul trading on Thursday.

The figures were well above market expectations. According to consensus compiled by Seoul-based financial data tracker FnGuide on Monday, Hyundai Motor was expected to deliver an operating profit of 2.28 trillion won on sales of 33.15 trillion won.

For the first six months, Hyundai Motor’s operating profit amounted to 4.91 trillion won, up 38.6 percent from the previous year. Net profit climbed 38.7 percent on year to 4.86 trillion won, and sales expanded 14.9 percent to 66.3 trillion won.

The growth was mostly driven by profitability improvements from increased sales of Genesis vehicles and SUVs and in U.S. and European markets amid favorable foreign exchange conditions. The U.S. dollar averaged at 1,260 won in the second quarter, 12.3 percent stronger from its rate versus the Korean won of a year earlier.

In April-June, Hyundai Motor sold total 976,350 vehicles, down 5.3 percent from a year-ago period. Domestic sales fell 9.2 percent to 182,298 units due to lack of chips and other parts from China’s lockdown despite well-received vehicles like Ioniq 5 and newly released Genesis G90. Overseas sales also were off 4.4 percent to 794,052 units due to output disruption from chip and other parts shortages.

[Source: Hyundai Motor Co.]

As of the end of the second quarter, 640,000 cars failed to be delivered to buyers, up 23 percent from a quarter earlier due to protracted semiconductor shortages, said a senior executive at the carmaker during the conference call.

Supply conditions show signs of easing, but management uncertainties will likely continue with geopolitical risk and resurge in Covid-19 infections, said Koo Za-yong, senior vice president and head of investor relations at Hyundai Motor.

“Challenging conditions are expected in the second half amid external uncertainties from surge in material prices and geopolitical risk, but the company will do its best to achieve its annual target,” Koo added.

It expects improvement in chip situation can bolster output and earnings in the second half when it will be rolling out new releases under stable labor condition. The much-awaited Ioniq 6 is due in the second half.

Hyundai Motor’s management and union last week tentatively settled collective bargaining terms for this year, enabling the company could finish this year without a labor dispute and strikes for the fourth consecutive year.

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