[Click eStock] Hyundai Mobis Faces Huge Cost Burden, Needs to Raise Prices

[Asia Economy Reporter Junho Hwang] Hyundai Motor Securities maintained the target price for Hyundai Mobis at 310,000 KRW despite the company posting first-quarter results below expectations and facing a significant increase in transportation costs this year. However, Hyundai Motor Securities also suggested that the substantial cost burden should be passed on in pricing.

Jang Munsu, a researcher at Hyundai Motor Securities, analyzed on the 25th, "Hyundai Mobis's first-quarter operating profit fell short of expectations," adding, "There was strong pressure on margin decline due to the lag between cost increases and price pass-through."

Hyundai Mobis recorded an operating profit of 386.9 billion KRW in the first quarter of this year. This is 22.7% lower than market expectations and a 21.1% decrease compared to the previous year. The impact of transportation costs increasing by 20 billion KRW compared to the same period last year was significant.

Researcher Jang analyzed, "It is necessary to pass on the rising cost factors to customers," noting, "The increase in raw material costs and logistics expenses had a greater negative impact on the profit and loss structure than the delay in volume recovery."

He added, "Following the recovery of the A/S supply rate, whether effective price pass-through occurs is expected to be a key factor in quickly reversing the sharp decline in A/S profitability."

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