Hyundai Motor Q3 Operating Profit 1.5518 Trillion KRW YoY Decrease... "Impact of Theta2 Quality Cost Reflected" (Update)

Sales and revenue both increase... Impact of exchange rate effect
Annual wholesale sales adjusted from 4.32 million to 4.01 million units

[Asia Economy Reporter Kiho Sung] Hyundai Motor Company reported that its operating profit for the third quarter of this year was 1.5518 trillion KRW, a 3.4% decrease compared to the same period last year. Although sales revenue increased compared to the previous year, the third-quarter performance reflects additional quality costs related to the recently announced Theta2 GDI engine.

Hyundai Motor announced this on the 24th through the electronic disclosure system. Hyundai's third-quarter results based on IFRS consolidated standards are ▲ sales of 1,025,008 units ▲ sales revenue of 37.7054 trillion KRW (29.5536 trillion KRW from automobiles, 8.1518 trillion KRW from finance and others) ▲ operating profit of 1.5518 trillion KRW ▲ ordinary profit of 2.042 trillion KRW ▲ net profit of 1.4115 trillion KRW (including non-controlling interests).

Hyundai's third-quarter sales increased year-on-year due to the easing of global vehicle semiconductor and other parts supply. However, the additional reflection of quality costs related to the recently announced Theta2 GDI engine caused a decrease compared to the same period last year.

First, in the third quarter (July to September), Hyundai sold 1,025,008 units in the global market. This is a 14.0% increase compared to the same period last year.

In the domestic market, despite the seasonal sales off-season, sales of new models such as the dedicated electric vehicle Ioniq 6 launched in July and the Genesis G90 showed strong performance, along with steady sales of high value-added models like the Grandeur and GV80, resulting in sales of 162,439 units, a 5.0% increase compared to the same period last year. In overseas markets, production increased due to the easing of parts supply, including semiconductors, and sales centered on eco-friendly vehicles in the US and Europe showed strong performance, resulting in sales of 862,569 units, a 15.9% increase compared to the same period last year.

Sales revenue was recorded at 37.7054 trillion KRW, a 30.6% increase compared to the same period last year. Sales increased due to higher sales volume, improved sales mix centered on Genesis and SUVs, reduced incentives, and favorable exchange rate effects. The average USD-KRW exchange rate in the third quarter rose 15.6% year-on-year to 1,338 KRW.

The cost of sales ratio fell by 1.4 percentage points from the previous year to 80.5%. Despite rising raw material prices, the ratio decreased year-on-year due to increased factory operating rates and favorable exchange rate effects. Selling and administrative expenses increased due to higher warranty costs related to the Theta2 GDI engine quality costs and increased marketing expenses for new models. The ratio of selling and administrative expenses to sales revenue rose by 2.8 percentage points year-on-year to 15.4%.

As a result, Hyundai's operating profit for the third quarter of 2022 was 1.5518 trillion KRW, a 3.4% decrease compared to the same period last year. The operating profit margin was 4.1%.

Ordinary profit and net profit were recorded at 2.042 trillion KRW and 1.4115 trillion KRW, respectively.

Meanwhile, cumulative results for the first three quarters (January to September) were ▲ sales of 2,904,049 units ▲ sales revenue of 104.0039 trillion KRW ▲ operating profit of 6.4605 trillion KRW.

A Hyundai Motor official said, "As the semiconductor supply shortage situation improves, production is increasing, but inventory levels in major markets remain very low, so incentives continued to decline." He added, "Although the semiconductor supply shortage is showing signs of recovery, management uncertainties due to geopolitical risks and interest rate hikes are expected to continue in the future."

Additionally, the annual wholesale sales target was lowered from 4.32 million units to 4.01 million units, reflecting the impact of prolonged geopolitical risks and vehicle semiconductor supply shortages. On the other hand, the year-on-year consolidated sales growth rate target was raised from 13-14% to 19-20%, reflecting favorable exchange rate conditions and continuous average selling price (ASP) increases due to improved sales mix.

The annual consolidated operating profit margin target was also raised from the previously stated 5.5-6.5% to 6.5-7.5%. This reflects active efforts to improve profitability, including continuous sales mix improvement and incentive reduction, despite the 1.3602 trillion KRW quality cost related to the Theta2 GDI engine reflected in the third quarter.

A Hyundai Motor official stated, "Although various management uncertainties persist, the vehicle semiconductor supply situation is gradually improving, so fourth-quarter sales are expected to increase compared to the third quarter." He added, "Despite the quality cost reflection in the third quarter, we expect to achieve record-high annual sales revenue and operating profit."

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