Hyundai Motor expected to see big profit boost this year
Local brokerages on Tuesday projected Hyundai Motor’s operating profit this year to hit 6.63 trillion won ($6 billion), up 132.6 percent from the forecast laid out for last year's earnings. If that turns out to be true, it will be the automaker's highest operating profit since 2014, when it recorded 7.5 trillion won.
Its sales forecast stood at 115.3 trillion won, up 10.8 percent from the previous year’s forecast.
Kia is also expected to post 3.9 trillion won in operating profit for 2021, which is up 116.6 percent from the previous year’s forecast.
Aside from the base effect derived from the poor auto market in 2020 due to the Covid-19 pandemic, analysts were optimistic about the Korean automakers’ business in 2021 as new models, a major share of which will have an electric powertrain, are expected to launch.
“Although deliveries of cars shrank by 10.4 percent in 2020 due to the coronavirus, Hyundai Motor’s earnings were robust, excluding the provisioning of 2.1 trillion won reflected in the financial statement due to Theta 2 gasoline engine recalls,” said Kwon Soon-woo, analyst from SK Securities.
“New models as well as scheduled shipments of existing models to overseas market in 2021 will boost Hyundai Motor’s deliveries of cars by 16.9 percent this year.”
The company reported an operating loss of 314 billion won in the third quarter of 2020 after reflecting the recall expense of 2.1 trillion won.
Hyundai Motor is scheduled to launch the all-electric Ioniq 5 in February as well as high-performance versions of its Avante sedan and Kona SUV, known as N Line models, in Korea this year.
It launched the partially revamped hydrogen-powered Nexo SUV in January. Its luxury brand Genesis will go into full gear in the United States this year as well, selling the G80 and GV80 models which launched in the latter part of last year as well as the GV70, which is scheduled to roll out in the United States this year.
“Back in 2014, Korea’s auto market was going through a quantitative growth," said Kim Jin-woo, an analyst from Korea Investment & Securities. “Now, the expectation is derived from the qualitative growth of Korea's auto market, which Hyundai Motor is leading.”
Hyundai Motor hasn’t been as profitable in recent years partially due to slow demand in the global auto market. The carmaker reported 6.4 trillion won in operating profit in 2015, followed by 5.2 trillion won, 4.6 trillion won, 2.4 trillion won and 3.7 trillion won over the following years.
Brokerage houses forecast the company will post 2.9 trillion won in operating profit for 2020.
Reflecting the expectations, shares of Hyundai Motor and its affiliates were bullish on Tuesday.
Hyundai Motor shares closed at 261,500 won, up 8.51 percent from the previous trading day. Kia was up 16.64 percent, Hyundai Mobis was up 6.65 percent and Hyundai Wia was up 5.6 percent on Tuesday.
BY JIN EUN-SOO [email@example.com]