Mando Passes Production Low Point... Recovery Phase in Second Half

[Asia Economy Reporter Koh Hyung-kwang] Hana Financial Investment evaluated Mando's first-quarter performance this year as weaker compared to the same period last year but better than initially feared. Future performance is expected to gradually enter a recovery phase, with the second quarter marking the bottom.

Song Seon-jae, a researcher at Hana Financial Investment, explained, "Sales in Korea and China, where automakers' factory shutdowns were significant, decreased by 2% and 42% year-on-year, respectively, whereas sales in North America, India, and Europe & South America, where the spread of COVID-19 was relatively delayed, increased by 19%, 5%, and 9%, respectively. The regions to watch are North America and India; in North America, supply to Ford and California-based electric vehicle companies increased, resulting in higher-than-expected growth rates, and in India, new deliveries to Kia Motors' India plant contributed."

He added, "Sales of Advanced Driver Assistance Systems (ADAS) increased by 12% year-on-year, raising their sales proportion to 14.2%. Operating profit margin declined due to fixed cost burdens from reduced scale, and one-time expenses also had an additional negative impact."

Due to the global spread of COVID-19, temporary production halts by automakers, and the reflection of one-time costs, second-quarter performance is expected to be significantly weak. Researcher Song predicted, "Mando's second-quarter sales will be {$_1.12 trillion KRW, with an operating loss of {$_63.3 billion KRW. However, on a monthly basis, production has already passed the bottom."

He forecasted, "Since Mando's stock price has continuously reflected the negative impact of COVID-19, from the second half of the year onward, it will reflect the resumption of automakers' production and its own growth drivers." He also added, "The efforts to secure cash liquidity and actively reduce costs as a response to the emergency situation are also supportive factors."

This content was produced with the assistance of AI translation services.