Hyundai Motor's net jumps 55% in second quarter

Hyundai Motor logo at a car dealership in Seoul [YONHAP]

Hyundai Motor saw net profit rise over 55 percent in the second quarter thanks to strong sales of high-margin models such as SUVs and electric vehicles (EVs) in the U.S. and Europe and a weak local currency.

Net profit for the April-June period was 3.08 trillion won ($2.35 billion), up 55.6 percent from last year’s 1.98 trillion won and far surpassing a market expectation of 2.03 trillion won compiled by market tracker FnGuide.

The carmaker reported record revenues of 36.0 trillion won, up 18.7 percent on year, exceeding the previous record of 31.3 trillion won in the fourth quarter of 2021.

Operating profit came in at 2.98 trillion won, up 58.0 percent on year and also a record. The previous record was the second quarter of 2014's 2.87 trillion won.

Revenues surpassed market expectations of 33.15 trillion won, and operating profit exceeded an expectation of 2.28 trillion won.

The number of cars sold decreased by 5.3 percent on year to 976,350 in the April-June period, but robust sales of high-end Genesis vehicles, SUVs and EVs in the U.S. and Europe drove profits.

In overseas markets, the company sold 794,052 units, down 4.4 percent on year, while in Korea it sold 182,298, down 9.2 percent on year.

The weakness of Korea's currency against the dollar also helped boost the bottom line.

“Despite the year-on-year decline in [unit] sales caused by various external factors such as the Russia-Ukraine war, the chip shortage and interest rate hikes in major markets, […] both revenue and operating profit jumped significantly due to an improved sales mix, lower dealer incentives and a favorable currency situation,” said Seo Gang-hyun, executive vice president of finance and accounting, in an online conference call Thursday.

Dealer incentives are the money paid to dealers to boost sales. With rising demand, they have been reduced.

Sales of SUVs jumped 4.7 percent in the second quarter compared to last year, accounting for 52 percent of total unit sales. EV sales jumped 49.1 percent on year to account for 5.4 percent of the total.

The company was cautious about the outlook for the latter half of the year.

“The chip shortage is getting better, but we expect uncertainties in market conditions to continue due to geopolitical risks and a resurgence in Covid-19 cases,” said a Hyundai Motor spokesperson in a release.

For the U.S. market, the company said that it will focus on EVs and SUVs to further improve its profitability.

“The U.S. car market contracted by 18 percent in the first half of this year compared to last year amid global supply risks and rising interest rates,” said Koo Ja-yong, senior vice president of Hyundai Motor and head of the investor relations team. “But the preference for SUV models is steadily increasing despite concerns over demand contraction in the latter half, and the eco-friendly vehicle market is expected to grow with gasoline prices soaring.”

Koo explained that the company will produce Santa Fe Hybrid EVs in its Alabama factory starting in October to meet rising demand for eco-friendly vehicles.

Hyundai Motor Group announced a $10.5 billion investment in the United States through 2025, including $5 billion in innovative mobility technologies, during U.S. President Joe Biden’s visit to Korea in May.

Hyundai Motor introduced the Ioniq 6 on July 14, the second car for the all-electric Ioniq brand. The car will go on sale in some parts of Europe at the end of this year, and in the first half of next year in North America.

Kia, Hyundai's affiliate, will announce its quarterly results Friday. The expected revenue for the company is 20.32 trillion won, up 10.8 percent on year, and operating profit 1.83 trillion won, up 23.1 percent.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]