Hyundai Motor's Q2 Operating Profit Halved Year-on-Year Due to COVID-19 Impact (Update)

Q2 Revenue 21.859 Trillion KRW · Operating Profit 590.3 Billion KRW

Genesis GV80 (Photo by Hyundai Motor Company)

[Asia Economy Reporter Kim Ji-hee] Hyundai Motor Company announced on the 23rd that it recorded sales of 21.859 trillion KRW and an operating profit of 590.3 billion KRW in the second quarter of 2020. These figures represent decreases of 18.9% and 52.3%, respectively, compared to the same period last year.

Hyundai Motor held a conference call at its Seoul headquarters on the same day to discuss its second-quarter 2020 business performance, reporting ▲ sales of 703,976 units ▲ sales revenue of 21.859 trillion KRW ▲ operating profit of 590.3 billion KRW ▲ ordinary profit of 596.3 billion KRW ▲ and net profit of 377.3 billion KRW (including non-controlling interests).

A Hyundai Motor official explained, “The second-quarter results were significantly impacted by the global spread of COVID-19, which led to mobility restrictions in key markets and factory shutdowns, causing a sharp decline in global automobile demand compared to the second quarter of last year, resulting in a large drop in sales and operating profit.” He added, “Nevertheless, favorable exchange rates due to the weak Korean won, reductions in individual consumption tax, support for replacing old vehicles, and tax benefits in the domestic market, along with strong sales of new models such as the GV80 and G80, helped to slightly mitigate the decline in profitability.”

Regarding future performance outlook, he said, “Despite expectations for a recovery in automobile demand in the second half, concerns remain over the resurgence of COVID-19 and the resulting economic downturn.” He continued, “In the second half, we will continue proactive liquidity management while focusing on defending profitability by successfully launching key new models and actively promoting sales normalization strategies by region.”

Global market sales totaled 703,976 units, down 36.3% from the same period last year. In the domestic market, despite the impact of COVID-19, sales increased by 12.7% compared to the same period last year due to demand recovery from the reduction in individual consumption tax and strong sales of new models such as the GV80, G80, and Avante. Conversely, overseas sales reached only 478,424 units, a 47.8% decrease from the previous year, as demand declined in all regions except China.

Sales revenue amounted to 21.859 trillion KRW, down 18.9% year-on-year, despite the favorable exchange rate environment due to the weak Korean won, improved product mix from increased sales of high value-added models such as Genesis and SUVs, and growth in financial sector sales, as global wholesale sales sharply declined.

The cost of sales ratio rose by 0.1 percentage points year-on-year to 83.0%, as lower global demand led to reduced operating rates at major plants, increasing fixed cost burdens despite the weak Korean won. Operating expenses decreased by 7.8% year-on-year to 3.1215 trillion KRW due to company-wide cost-cutting efforts. As a result, operating profit for the second quarter fell 52.3% year-on-year to 590.3 billion KRW, and the operating profit margin dropped 1.9 percentage points to 2.7%.

Ordinary profit recorded 596.3 billion KRW, down 57% from the same period last year, and net profit stood at 377.3 billion KRW.

Accordingly, cumulative results for the first half of this year showed sales revenue of 47.1784 trillion KRW and operating profit of 1.4541 trillion KRW.

A Hyundai Motor official stated, “Despite the challenging business environment, we plan to continue crisis management focused on liquidity management in the second half, while concentrating on expanding sales of high value-added products such as new models and SUVs to improve the product mix, and implementing regional sales normalization strategies to expand market share and defend profitability.”

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