Hyundai Motor reports 1.4 trillion won in net profit in third quarter

Industry

Published: 24 Oct. 2022, 17:57 Updated: 24 Oct. 2022, 18:02

Hyundai Motor reports 1.4 trillion won in net profit in third quarter

Hyundai Motor headquarters in Yangjae-dong, southern Seoul [YONHAP]

Hyundai Motor reported 1.4 trillion won ($975 million) in net profit in the third quarter, significantly lower than the market consensus of 2.36 trillion won compiled by FnGuide.

On year, the company's net was down 5.1 percent, though mainly for accounting reasons, as the company reflected 1.4 trillion won for provisions to resolve complaints involving the Theta II gasoline direct injection (GDi) engine and offer other customer services.

Quarterly revenues came in at an all-time high of 37.7 trillion won, up 30.6 percent on year, beating the market expectation of 35.9 trillion won.

Operating profit fell 3.4 percent to 1.5 trillion won during the July-to-September period. The market consensus was 2.85 trillion won.

“Revenues improved thanks to strong sales of high-margin models such as Genesis SUVs and Ioniq electric vehicles (EVs), as well as the improved semiconductor shortage situation worldwide,” Seo Gang-hyun, head of the planning and finance division said during a conference call held Monday.

“But profitability fell due to the huge quality expense.”

Hyundai sold a total of 1.03 million vehicles in the global markets in the third quarter, up 14 percent on year. Domestic sales rose 5 percent to 162,439 while overseas sales increased 15.9 percent.

SUVs accounted for 50.6 percent, with robust sales of Santa Fe and Tucson SUVs.

Hyundai Motor is set to release its latest premium Grandeur sedan next month. [HYUNDAI MOTOR]

Sales of premium Genesis cars rose 8.7 percent year-on-year.

EVs account for 5.1 percent in the third quarter result compared to 4.6 percent in the same period last year. A total of 2,660 Ioniq 6s were sold in the Korean market in the third quarter, with some 40,000 on the waiting list.

The automaker said it predicts an even stronger fourth quarter.

“Profitability will likely rise further as the automobile semiconductor shortage problem will likely be improved, and our newly released vehicles are getting good feedback in the market,” Seo added.

“Despite the huge quality expense, we expect to report all-time highs of yearly revenues and operating profits in 2022.”

Seo also hinted at the possibility of building a joint battery component venture in the U.S., as a part of efforts to respond to the U.S.'s recently-passed Inflation Reduction Act.

“We’ve been discussing various ways to respond to the tax rule, including building a joint battery component venture in the United States,” said Seo.

“Hyundai will actively push for component recycling business as well as other countries will likely pass similar rules in the future.”

A groundbreaking ceremony for Hyundai’s Georgia EV-dedicated factory is scheduled for Oct. 25, with the goal of starting mass production in 2025.

Hyundai Motor aims to sell 1.87 million EVs in 2030, and of those, the automaker hopes some 28 percent will come from the U.S. market.

Hyundai Motor shares fell 3.3 percent to close at 161,500 won Monday.

BY SARAH CHEA [chea.sarah@joongang.co.kr]