Hyundai ups 2022 revenue, profit forecasts as quality costs hit Q3 profit

South Korea’s top automaker Hyundai Motor Co. on Monday posted its highest-ever quarterly sales, driven by pricey sport utility vehicles and premium Genesis models as well as favorable dollar-won exchange rates.

The flagship unit of Hyundai Motor Group, however, said its third-quarter operating profit missed market expectations after the company earmarked 1.4 trillion won ($972 million) in one-off quality costs related to faulty Theta engines.

Sales in the July-September period reached a quarterly record high of 37.7 trillion won on a consolidated basis, up 31% from 28.9 trillion won a year earlier.

Consolidated operating profit fell 3.4% on year to 1.55 trillion won from 1.6 trillion won, while net profit shed 5.1% to 1.41 trillion won from 1.48 trillion won.

Hyundai sold a total of 1,025,008 cars in the third quarter, up 14% from a year earlier, as chip supply conditions eased around the globe, it said.

Hyundai’s electric vehicle sales rose more than 27% on year to around 52,000 units in the third quarter, accounting for 5.1% of its total sales volume. The increase mainly stemmed from strong sales of the newly launched IONIQ 6 and the GV60, it said.

Last week, the carmaker said it and its affiliate Kia Corp. will reflect 2.9 trillion won in quality costs related to faulty Theta engines in their third-quarter results.

Excluding the provisions, its third-quarter operating profit would have exceeded 2.9 trillion won, it said.

REVISES UP ANNUAL REVENUE, PROFIT MARGIN GUIDANCE

Citing increasing external uncertainties, Hyundai Motor slashed its global sales target for this year to 4.01 million units from the 4.32 million it forecast earlier this year.

It also lowered its planned 2022 capital expenditures to 8.9 trillion won from the 9.2 trillion won it announced earlier.

However, the company raised its full-year revenue and profit margin guidance, betting on strong sales of luxury Genesis models and sport utility vehicles as well as a further plunge in the local currency.

The Korean currency’s considerable drop versus the dollar in recent months will help Hyundai’s profits, boosting the value of earnings gained abroad.

Hyundai Motor now expects a 2022 revenue increase of 19-20%, up from the gain of 13-14% it previously forecast.

It also estimates its operating profit margin to be 6.5-7.5% this year, up from its previous expectations in the 5.5-6.5% range.

“We expect record-high results this year despite the provisions and remaining uncertainties, including geopolitical issues and fluctuating interest rates,” the company said in a statement.

For the first nine months of this year, Hyundai’s global sales totaled 2,904,049 units, while revenue reached 104.4 trillion. The nine-month operating profit stood at 6.46 trillion won while net profit was 6.27 trillion won during the period.

Meanwhile, Hyundai Motor Group Chairman Chung Euisun on Monday embarked on a business trip to the US.

While staying in the US, Chung is expected to attend the groundbreaking ceremony for a new EV manufacturing plant in the state of Georgia on Tuesday.

He is also said to be meeting with US government officials, including White House climate change advisor Ali Zaidi, to discuss issues surrounding the Inflation Reduction Act (IRA).

(Updated with third-quarter EV sales data, nine-month results and Chairman Chung's US trip)

Write to Han-Shin Park at phs@hankyung.com
In-Soo Nam edited this article.