Despite Reflecting Q3 Quality Costs... Hyundai Motor Raises This Year's Earnings Guidance

Continued SUV Sales Expected to Reflect Exchange Rate Effects
"Annual Record-Breaking Performance Anticipated"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] Despite reflecting large-scale quality costs in the third quarter, Hyundai Motor Company raised its sales and operating profit margin forecasts for this year. Continued sales of high value-added models such as sports utility vehicles (SUVs) and the rise in exchange rates are expected to have an impact.

On the 24th, Hyundai Motor projected through a conference call that its annual sales this year will increase by 19-20% compared to the previous year, and the operating profit margin will improve from 5.5-6.5% to 6.5-7.5%. Favorable exchange rate conditions and improvements in the sales mix are expected to influence sales. Additionally, continuous improvements in the sales mix and reductions in incentives are expected to positively affect the operating profit margin.

Based on this, they anticipated performance improvements in the fourth quarter as well. Hyundai Motor stated, "With improvements in the vehicle semiconductor situation, fourth-quarter sales are expected to increase compared to the third quarter and the same period last year," emphasizing that "record-high annual performance is expected."

However, the wholesale sales target was reduced from 4.32 million units to 4.01 million units. This is due to expectations of prolonged impacts from the Russia-Ukraine war and the shortage of vehicle semiconductors. Furthermore, this year's investment amount was lowered from 9.2 trillion won to 8.9 trillion won. Specifically, research and development (R&D) investment remains at 3.6 trillion won, while capital expenditure (CAPEX) investment was reduced from 5 trillion won to 3.9 trillion won, and strategic investment increased from 600 billion won to 1.4 trillion won.

In particular, they plan to continue responding to raw material issues. At the time of the first-quarter earnings announcement, Hyundai Motor announced that it would expand the scope of raw material management, moving away from the previous purchasing method that relied on suppliers' self-procurement. To this end, a raw material consultative body involving all departments such as purchasing, research institutes, sales, and finance has been established to respond to raw materials.

Hyundai Motor explained, "We have established a system for continuous monitoring of major raw materials and automatic calculation of profit and loss impacts," adding, "In addition, we will secure stability and profitability through direct purchase of major raw materials, promotion of long-term supply contracts, annual volume confirmation plans, and hedging with financial products such as derivatives."

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