Hyundai Motor Q2 Operating Profit 2.9798 Trillion Won... Record High Performance (Comprehensive)

58% Increase Year-on-Year... Sales 35.9999 Trillion Won
High-Value Vehicles and Exchange Rate Effects Despite Sales Decline

[Asia Economy Reporters Kiho Sung and Hyunseok Yoo] Hyundai Motor Company recorded its highest-ever performance in the second quarter of this year. Despite a decline in global sales due to challenges such as a shortage of automotive semiconductors, the company showed strong growth in performance driven by increased new car sales and favorable exchange rate effects.

On the 21st, Hyundai Motor announced that its second-quarter results for this year, based on IFRS consolidated standards, recorded sales of KRW 35.9999 trillion (automotive KRW 28.504 trillion, finance and others KRW 7.4959 trillion) and operating profit of KRW 2.9798 trillion. The last time Hyundai’s quarterly operating profit exceeded KRW 2 trillion was in the second quarter of 2014 (KRW 2.0872 trillion).

Hyundai stated that although second-quarter sales decreased compared to the same period last year due to ongoing production shortages caused by global automotive semiconductor and other parts supply disruptions, operating profit increased year-on-year thanks to improved sales mix centered on Genesis and sport utility vehicles (SUVs), improved regional mix focused on advanced countries, and favorable exchange rate effects.

A Hyundai official said, “Inventory levels in major markets are very low, leading to a continuous decline in incentives. Semiconductor supply issues are showing signs of recovery, but management uncertainties are expected to continue due to geopolitical risks and the resurgence of COVID-19.”

Meanwhile, Hyundai decided to maintain its 2022 annual performance guidance announced last January, targeting a consolidated sales growth rate of 13-14% year-on-year and a consolidated operating profit margin of 5.5-6.5%. A Hyundai official stated, “Although difficult management conditions are expected in the second half due to the full-scale impact of rising raw material prices and geopolitical risks, we will make company-wide efforts to achieve the guidance announced at the beginning of the year.”

Global sales at 976,350 units... down 5.3% year-on-year

Hyundai sold 976,350 units in the global market in the second quarter of 2022 (April to June), a 5.3% decrease compared to the same period last year.

In the domestic market, despite strong sales of the Ioniq 5 and newly launched G90 SUVs and Genesis models this year, sales declined 9.2% year-on-year to 182,298 units due to semiconductor shortages and parts shortages caused by lockdowns in some regions of China.

In overseas markets, sales increased year-on-year in the U.S. and European markets centered on eco-friendly vehicles, but overall sales declined 4.4% year-on-year to 794,052 units due to production disruptions caused by semiconductor and other parts shortages in some other markets.

Sales revenue up 18.7% year-on-year... operating profit up 58%

Sales revenue rose 18.7% year-on-year to KRW 35.9999 trillion. The improvement in sales mix centered on Genesis and SUVs, reduction in incentives, and exchange rate effects offset the impact of the overall volume decline, resulting in increased sales revenue. The average KRW-USD exchange rate in the second quarter rose 12.3% year-on-year to 1,260 KRW.

The cost of sales ratio fell 1.7 percentage points year-on-year to 79.4%. Despite a decrease in global wholesale sales, the ratio declined due to favorable exchange rate effects and improved mix effects centered on high value-added models. Selling and administrative expenses increased due to higher marketing and investment costs, but the ratio of selling and administrative expenses to sales revenue decreased 0.4 percentage points year-on-year to 12.3% due to the increase in sales revenue.

As a result, operating profit in the second quarter rose 58.0% year-on-year to KRW 2.9798 trillion. The operating profit margin was 8.3%.

Ordinary profit and net profit were KRW 3.8888 trillion and KRW 3.0848 trillion, respectively.

Meanwhile, cumulative results for the first half of the year (January to June) were ▲sales of 1,879,041 units ▲sales revenue of KRW 66.2985 trillion ▲operating profit of KRW 4.9087 trillion.

"Mix improvement centered on high value-added models"

Regarding future management outlook, Hyundai expects improvement in parts supply including semiconductors and gradual production expansion, but also anticipates continued unpredictable management conditions due to global uncertainties such as sharp rises in raw material prices caused by geopolitical conflicts, concerns over COVID-19 resurgence, inflation expansion, and interest rate hikes.

It also cited increased marketing costs due to expanded exchange rate volatility and intensified competition among companies as burdens on management activities.

The global automobile market is expected to continue strong growth in the eco-friendly vehicle sector, especially electric vehicles, influenced by stricter environmental regulations in major countries, increased investment in eco-friendly infrastructure, and expanded preference for eco-friendly vehicles.

In this regard, Hyundai plans to focus on ▲strengthening its electric vehicle lineup with the launch of the second model of its dedicated electric vehicle brand ‘Ioniq,’ the ‘Ioniq 6,’ in the third quarter of 2022 ▲maximizing sales through production and sales optimization ▲expanding market share and defending profitability through mix improvement centered on high value-added models.

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