The article below is sourced from Bloomberg Wire Service. The views and opinions expressed in this story are those of the Bloomberg Wire Service and do not necessarily reflect the official policy or position of NADA.
Hyundai Motor Co. reported third-quarter earnings that beat analyst forecasts thanks to strong sales of luxury models and electric vehicles, as well as the Korean won’s continued weakness.
Consolidated operating profit for the three months through September rose 146% from a year earlier — when the company booked one-off warranty provisions — to 3.8 trillion won ($2.8 billion), beating the 3.6 trillion won mean estimate from 24 analysts. Sales rose 8.7% to 41 trillion won.
Hyundai said it sold nearly 169,000 electrified models in the period, an increase of more than 33% from a year earlier. Total global vehicle sales topped 1.04 million, rising about 2% outside Korea, helped by strength in North America, Europe and India, it said. But they fell 33% in China.
The company acknowledged a suite of potential threats to its business, including rising interest rates and inflation, an economic slowdown, turmoil from military conflicts and wage pressure tied to union activities. Still, it said sales momentum should gain thanks to improved production, strong demand for key brands and lower inventory levels.
Sales of luxury models, including Genesis and sport-utility vehicles, accounted for almost 60% of the quarterly total, while battery-powered vehicles accounted for 6.3%. The won weakened about 2.4% against the dollar in the quarter.
Hyundai also announced 1,500 won per share cash payout to shareholders, or 0.8% yield for common-stock investors.
Hyundai said it plans to introduce more EV models globally, including the Kona EV, Genesis GV60, Electrified G80 and GV70, as well as its Ioniq 6. The fifth-generation Santa Fe SUV should help sales momentum this year, it said.
US Record
Revenue and profit for the year will reach the upper range of its guidance, the company said, as US sales — driven by the popularity of luxury models like Genesis and Palisade and electric vehicles — hit a record high.
“Dealers in US loved our new Santa Fe model, and we expect it to gain popularity later this year,” said Seo Gang-Hyun, a Hyundai vice president, adding that the carmaker is spending less on incentives for gasoline-powered vehicles in the US than rivals. “We have established a successful communication system with our local design center and R&D center to reflect what local consumers want in US.”
While Hyundai acknowledges the risk of a global recession and slowing demand for EVs, it has no plan to change its production of the battery-powered cars.
“EV sales could be lower-than-expected next year,” Seo said. “But it won’t affect total revenue because of our flexibility in adjusting production” of electric and gas-powered cars, he said.
“We don’t plan to radically reduce our planned sales for EVs,” he said. “We still believe the market is going into EVs.”
The company’s EV approach is noteworthy, said Kim Jin-Woo, an analyst at Korea Investment & Securities.
“It’s impressive that Hyundai maintained its EV strategy, without joining the recent trend of withdrawing or delaying productions,” Kim said. “They are probably confident of EVs because sales of the battery-powered cars don’t account for a large portion of their revenue yet and they believe they are competitive on quality.”
Turmoil
The Israel-Hamas war will hit Hyundai’s earnings in the next quarter, Seo said, given that it’s one of the top carmakers in the country. The company sells around 5,000 vehicles there per quarter.
Another risk is that the United Auto Workers strike may lead to a wage hike at Hyundai’s plants in Georgia and Alabama, he said.
“We don’t belong to UAW, but probably we should talk to our employees for wage negotiations,” Seo said. “But although Ford Motor Co. agreed on a 25% hike, that doesn’t mean we should go with the same amount.”
For more stories like this, bookmark www.NADAheadlines.org as a favorite in the browser of your choice and subscribe to our newsletter here:
