Hyundai vows $8.5 billion investment after record 2022 sales, profit

South Korea’s top automaker Hyundai Motor Co. said on Thursday it will spend 10.5 trillion won ($8.5 billion) this year to ramp up facilities for electric cars and other eco-friendly vehicles after it posted record revenue and operating profit last year.

The flagship unit of Hyundai Motor Group also gave ambitious sales and profit guidance for this year despite tough business conditions such as high inflation and slowing global economic growth.

Its sales reached a record 142.5 trillion won on a consolidated basis in 2022, up 21.2% from 117.6 trillion won in the previous year, Hyundai said in a regulatory filing.

Consolidated operating profit rose 47% to an all-time high of 9.82 trillion won from 6.68 trillion won.

Net profit jumped 40% to 7.98 trillion won.

The company attributed its strong yearly performance to robust sales of its luxury Genesis models and pricey sport utility vehicles as well as favorable dollar-won exchange rates.

The stellar full-year results came after the company earmarked 1.4 trillion won in one-off quality costs related to faulty Theta engines in the third quarter.

Excluding the provisions, its full-year operating profit would have exceeded 10 trillion won, it said.

GROWING PORTION OF ECO-FRIENDLY CARS

Hyundai sold 3.94 million vehicles globally in 2022, up 1.37% from a year earlier.

Luxury Genesis cars and SUVs accounted for 56.8% of its total global sales, up 4.4 percentage points from the previous year.

The company sold 505,000 eco-friendly vehicles, including EVs, in 2022, up 19.7% from the year prior.

For the fourth quarter of last year, its net profit more than doubled to 1.71 trillion won from 701.4 billion won in the year-earlier period.

Quarterly operating profit also more than doubled to 3.36 trillion won from 1.53 trillion won. Revenue increased 24% on year to 38.52 trillion won from 31.03 trillion won.

“An improved product mix and a low level of incentives helped the quarterly bottom line,” said a Hyundai official.

Shares of Hyundai Motor closed 5.6% higher at 174,900 won on Thursday, boosted by the decent earnings report. The broader benchmark Kospi index finished up 1.7%.

UPBEAT FORECAST

In a bid to build investor confidence, the top Korean automaker unveiled ambitious annual guidance that projects a revenue increase of 10.5-11.5% and an operating profit margin of 6.5-7.5% for 2023.

Hyundai Motor said it aims to sell 4.32 million cars globally this year, up 9.6% from last year.

Citing the Inflation Reduction Act (IRA), which favors EVs with batteries supplied in the North American market as the biggest challenge in its US sales this year, the company said it will strive to sell more EVs, led by the new all-electric IONIQ 6 sedan and the steady seller IONIQ 5 crossover.

Hyundai plans to more than double its EV sales in the US to 73,000 cars this year from last year’s 29,320 units.

“We will do our best to minimize any negative impact of the IRA on our US consumers until our new EV plant in Georgia is up and running in 2024,” Chief Financial Officer Seo Gang-hyun said during a conference call with analysts.

Last October, Hyundai broke ground on a $5.54 billion EV and battery plant in the US state of Georgia to benefit from the US tax break law and enhance its presence in the world’s second-largest car market.

RECORD 2023 CAPEX, SHARE CANCELLATION

Hyundai’s 10.5 trillion won in 2023 capital expenditure plan, announced on Thursday, marks the company’s highest annual spending and compares with the 9.2 trillion won such investment in 2022.

The carmaker has been strengthening its EV lineup by launching the Genesis GV60, Electrified GV70, and IONIQ 6 in line with increasing consumer preferences for eco-friendly models.

Hyundai and its sister firm Kia Corp. have sold more than 1 million electric cars globally since they began selling EVs in 2011.

Meanwhile, Hyundai said on Thursday it will retire 2.13 million treasury shares, amounting to 1% of its total outstanding shares, to enhance shareholder value.

The value of the share cancellation is estimated at 315.4 billion won.

Hyundai said it will pay 7,000 won per common share in dividends for 2022 shareholders, up from the previous year’s 4,000 won, reflecting its results improvement.

Kia is slated to report its 2022 results on Friday.

Write to Il-Gue Kim and Han-Shin Park at Black0419@hankyung.com
In-Soo Nam edited this article.