Hyundai Motor Posts Q1 Operating Profit of 2 Trillion Won Despite Semiconductor Supply Concerns (Comprehensive)

Sales of 30.2986 trillion KRW, up 10.6% YoY
Operating profit forecast by securities firms exceeds 1.6484 trillion KRW
"Maximizing sales through production and sales optimization"

[Asia Economy Reporter Yoo Hyun-seok] Despite challenges such as semiconductor supply instability, Hyundai Motor Company posted strong earnings. The company exceeded securities analysts' expectations due to continued mix improvement driven by increased sales of Genesis and Sports Utility Vehicles (SUVs).

On the 25th, Hyundai Motor announced through a public disclosure that its operating profit for the first quarter rose 16.4% year-on-year to 1.9289 trillion KRW. Revenue increased by 10.6% to 30.2986 trillion KRW.

These figures surpassed market forecasts. According to FnGuide, as of the 24th, securities analysts had projected Hyundai's first-quarter revenue and operating profit at 29.7948 trillion KRW and 1.6484 trillion KRW, respectively.

The increase in revenue was driven by the positive effects of sales mix improvement centered on Genesis and SUVs, as well as favorable exchange rate impacts, which offset the overall volume decline. The cost of sales ratio fell by 0.7 percentage points from the previous year to 80.9%. Despite a decrease in global wholesale sales, the decline in cost ratio was supported by favorable exchange rates and mix improvement focused on high value-added models, contributing positively to operating profit. The ratio of selling and administrative expenses to revenue rose by 0.4 percentage points year-on-year to 12.7%, influenced by increased marketing and investment costs.

Hyundai sold 902,945 vehicles in the first quarter, a 9.7% decrease compared to the same period last year. In the domestic market, sales of SUVs and new Genesis models such as the Ioniq 5, Casper, and G90 performed well. However, due to semiconductor shortages and parts supply disruptions caused by lockdowns in certain regions of China, domestic sales declined 18.0% year-on-year to 152,098 units.

In overseas markets, despite strong popularity of SUV models, sales in most regions except Europe showed weakness due to production disruptions caused by semiconductor supply shortages. Overseas sales totaled 750,847 units, down 7.8% from the previous year.

A Hyundai Motor representative stated, "Although first-quarter sales decreased year-on-year due to ongoing production shortages caused by global vehicle semiconductor and other parts supply disruptions, operating profit increased compared to the same period last year thanks to sales mix improvements centered on Genesis and SUVs, regional mix improvements focused on advanced countries, and favorable exchange rate effects. Inventory levels in key markets remain very low, which has led to a continued decline in incentives."

Regarding the business environment outlook, Hyundai expects a gradual stabilization of the global pandemic situation and semiconductor shortage. However, it anticipates continued challenges due to global uncertainties such as ongoing parts supply imbalances caused by lockdowns in some Chinese cities, geopolitical tensions between countries, and sharp rises in raw material prices. Increased exchange rate volatility and rising marketing costs due to intensified competition among companies are also cited as burdens on business operations.

Meanwhile, Hyundai foresees the global eco-friendly vehicle market continuing strong growth centered on electric vehicles, driven by stricter environmental regulations in major countries, increased investment in eco-friendly infrastructure, and expanding preferences for eco-friendly cars. Hyundai plans to focus on maximizing sales through production and sales optimization, expanding market share and protecting profitability through mix improvement centered on high value-added models, and strengthening its electric vehicle lineup with global launches of key new models such as the GV60, GV70 electrified models, and Ioniq 6.

Additionally, Hyundai decided to maintain its previously announced targets from January for this year: a 13-14% year-on-year growth in consolidated revenue and an operating profit margin of 5.5-6.5%. A Hyundai Motor official emphasized, "Although a difficult business environment is expected in the second quarter due to the full impact of rising raw material prices and geopolitical risks, we will make every effort company-wide to achieve the guidance announced at the beginning of the year."

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