Subsidiary Volume Becomes a 'Hero'... Innocean Achieves 'Surprise Earnings'

Operating Profit of 41.7 Billion KRW in Q2... 60% Increase Compared to Same Period Last Year

Innocean, the advertising subsidiary of Hyundai Motor Group, recorded an earnings surprise thanks to the volume effect from its affiliates.

According to Innocean on the 1st, its consolidated operating profit for the second quarter reached 41.7 billion KRW, a 60.5% increase compared to the same period last year. This far exceeded the market expectation of 32.3 billion KRW, resulting in an earnings surprise. Sales increased by 22.5% to 496.7 billion KRW, and net profit surged 167% to 32.7 billion KRW.

Gross profit, a key performance indicator in the advertising industry (sales revenue minus cost of sales), rose 20% during the same period to 213.4 billion KRW. In the domestic (headquarters) market, it recorded 52.2 billion KRW, while overseas markets accounted for 161 billion KRW. By region, the figures were 111.7 billion KRW in the Americas, 25.7 billion KRW in Europe, 20.9 billion KRW in emerging markets (India, Middle East, etc.), and 3 billion KRW in China, respectively.

The strong performance was mainly driven by an increase in electric vehicle (EV) campaign volume from its largest advertiser. Despite a gloomy outlook for the advertising and marketing industry due to the economic downturn, Innocean achieved strong results by increasing advertising agency work for affiliates’ (captive) models such as Kona EV, EV9, and Ioniq.

The rise in non-media advertising (BTL) volume, including exhibitions and events, also contributed to the performance increase. With the endemic phase, BTL agency volume showed a recovery trend, and volumes from non-affiliated advertisers also grew rapidly. Additionally, the pre-investment effect of workforce expansion aimed at strengthening digital capabilities was reflected in the results, leading to an increase in profit scale.

Innocean is expected to maintain stable growth in the second half of the year, supported by increased volume from affiliates. Domestically, campaigns are planned for the full change of Santa Fe, K5, Sorento, and the facelift (F/L) of Carnival, while overseas campaigns are scheduled for new EV models EV5 and EV9.

The securities industry forecasts Innocean’s operating profit for the third quarter to be 37.6 billion KRW, a 4% increase year-on-year. Minha Choi, a researcher at Samsung Securities, said, “The second-quarter results confirm the recovery trend in volume from non-affiliated advertisers, so non-affiliated volume is expected to expand significantly in the second half.” He added, “Although we initially expected flat growth at last year’s level, considering the first half’s results and the second half’s business conditions, we are revising our forecast upward to single-digit growth.” Furthermore, Innocean plans to reflect the consolidated results of the digital marketing company ‘D.Plan 360,’ which it announced acquiring in June, in the second half of the year.

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