Hyundai Motor's net profit drops by a third in 2020

[YONHAP]

Hyundai Motor’s net profit dropped by 33.5 percent in 2020 as sales fell in the United States and Europe and as the Korean carmaker had to make huge provisions due to problems with the Theta 2 engine.

Revenues were down 1.7 percent.

According to the company, net profit came in at 2.1 trillion won ($1.9 billion) in 2020, down from 3.2 trillion won in 2019, while revenue was 103.9 trillion won, down from 105.7 trillion won.

Total global vehicle sales were 3.7 million, down by 15.4 percent from 4.4 million.

In the third quarter, the company provisioned 2.1 trillion won against expenses related to the Theta 2, a gasoline direct injection engine that experienced a number of failures over the past decade, including fires.

In the United States, 4.17 million units were recalled in 2019, while 520,000 units were recalled in Korea.

The company posted a net loss of 188.8 billion won in the third quarter.

The company’s results were strong in the fourth quarter. Revenue came in at 29.3 trillion won, up from 27.8 trillion won in the fourth quarter of 2019, while net profit was 1.4 trillion won, compared to 722 billion won the year before.

Total global vehicle sales came in at 1.14 million units, compared to 1.19 million a year earlier.

“Robust sales of SUV models and Genesis luxury models as well as declining incentives helped lift revenue in the fourth quarter despite an adverse economic environment and an unfavorable exchange rate,” the company wrote in a statement.

Sales of Genesis accounted for 3.7 percent from Hyundai Motor’s fourth quarter sales, an increase from 1.7 percent during the same period a year earlier. SUV sales accounted for 43 percent during the cited period, an increase from 41.9 percent in the fourth quarter of 2019.

Korea was the only market in which the carmaker reported growth in car sales in 2020, largely as a result of government subsidies. In Korea, the carmaker sold 1.85 million units, 6.1 percent more than the previous year.

In the United States it sold 14.5 million units, a 14.6-percent decline on year. In Europe, it sold 11.9 million units, a 24.3-percent fall from the same period in 2019.

Solidifying the position of the Genesis and Ioniq electric vehicle (EV) brand in the global market is Hyundai Motor's top priority in 2021.

EV-wise, the company plans to roll out four new models this year, including the Mistra EV in China and Ioniq 5 in Europe.

Sales of Ioniq 5, the first model to utilize on the carmaker’s EV-dedicated modular E-GMP, will start in Europe first in late March, the company said, followed by rollouts in Korea and the United States.

The carmaker said it hopes to sell 160,000 EVs in the global market this year, which is a 60-percent increase from the previous year.

The Genesis sales target is 200,000 units in 2021, up by 55 percent from the previous year.

Following the introduction of the GV80 and the new G80 in the United States last year, Hyundai Motor plans to boost its sales in the United States through the introduction of the new Tucson SUV in the first quarter and GV70 in the second quarter, followed by the Santa Cruz pickup truck and Ioniq 5 in the latter half.

Hyundai Motor's global sales target is 4.16 million units this year, 741,500 units of which would be sold domestically. It hopes to capture 4.8 percent of the U.S. auto market this year, up from 4.4 percent last year.

The Korean carmaker pledged to invest 8.9 trillion won this year, half of which will go toward capital expenditures and 3.5 trillion won into research and development.

It will pay a year-end dividend of 3,000 won per share, though the company skipped its interim 2020 dividend.

Hyundai Motor’s share price fell to 251,500 won Tuesday, down by 3.27 percent.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]