Hyundai’s record Q3 profit beats Samsung; no EV output cut planned

Hyundai Motor Co. on Thursday posted its highest-ever quarterly operating profit for the July-September period, driven by robust sales of pricey cars under the Genesis brand, sport utility vehicles and eco-friendly cars.

Hyundai, South Korea’s top automaker, said its third-quarter operating profit reached 3.82 trillion won ($2.8 billion) on a consolidated basis, up 146% from 1.55 trillion won a year earlier.

With that figure, the flagship unit of Hyundai Motor Group became Korea’s highest earner, pushing past the longest-reigning champion, Samsung Electronics Co., for the third consecutive quarter.

Hyundai’s net profit more than doubled to 3.3 trillion won from 1.41 trillion won.

Consolidated sales rose 8.7% year on year to 41 trillion won from 37.7 trillion won.

Hyundai’s latest results came in above market expectations for an operating profit of 3.6 trillion won and sales of 40.2 trillion won.

Third-quarter operating profit margin stood at 9.3%, more than double the 4.1% margin in the year-earlier period.

The carmaker said its global auto sales in the third quarter rose 2% from a year earlier to 1.05 million units thanks to strong sales in North America, Europe and India.

Its record third-quarter operating profit was also due to a low comparison base from the year-earlier period when the company booked 1.4 trillion won in one-off quality costs related to faulty Theta engines used in Hyundai and its sister firm Kia Corp. vehicles.

The company said it would pay out 1,500 won a share in dividends for the third quarter.

STRONG SALES DESPITE SLOWING EV MARKET

Hyundai’s stellar performance came amid a slowdown in the global electric vehicle market due to weak economic conditions and regional conflicts.

In the Korean market, the carmaker’s sales were boosted by SUVs, which sold 166,969 units in the third quarter, up 2.8% from the year-earlier period. The company unveiled an all-new Santa Fe, which became an instant hit upon its launch in August.

In overseas markets, Hyundai sold a total of 878,541 vehicles in the third quarter, up 1.9% from a year ago.

The US market played a key role in its overall third-quarter sales. Hyundai sold 20,053 cars in North America in the July-September quarter, up 9% from the year-earlier period.

Premium Genesis cars sold 52,000 units globally, up 2.4% from a year earlier. Its SUV sales gained 6.3% year on year to 587,000 units.

By vehicle type, Hyundai’s hybrid cars saw strong sales with 122,000 units, up 10% from a year earlier. The third-quarter hybrid sales represent a doubling of such vehicle sales of 64,000 units each in the first and second quarters.

Sales of eco-friendly cars, including EVs and hybrid vehicles, rose by a third from a year ago to 168,953 units in the third quarter.

In the first nine months of this year, Hyundai posted an operating profit of 11.65 trillion won, up 80% from 6.46 trillion won in the year-earlier period. The January-September operating profit surpassed last year’s full-year profit of 9.82 trillion won.

Sales revenue in January-September rose 16.4% year on year to 121 trillion won, with car sales of 3.12 million units.

MURKY OUTLOOK

While expecting strong earnings to continue, boosted by growing demand from its major markets, Hyundai said it faces tough business conditions such as escalating tensions in the Middle East, as well as elevated interest rates and inflation for the rest of the year.

“We expect annual sales to increase this year, aided by low inventory levels and the rollout of new models including the new Santa Fe,” said a Hyundai official. “However, we expect heightened global uncertainty such as the geopolitical risk in the Middle East and volatile currency exchange rates.”

The company said it will enhance the IONIQ 5 EV brand’s global awareness, strengthen its hybrid lineup and improve its product mix by launching new premium SUVs such as the revamped Genesis GV 80 and an all-new GV80 Coupe.

The carmaker has no plans to cut EV output despite the overall EV market slowdown, said company executives.

Industry watchers expect Hyundai Motor and Kia to post more than 20 trillion won in combined operating profit this year – which would be a record full-year profit.

With the strong third-quarter results, the two car-making units of Hyundai Motor Group are on track to reach their annual global sales target of 4.32 million cars for Hyundai and 3.2 million units for Kia.

Earlier this year, Hyundai Motor said it aims to achieve an operating profit of between 13 trillion won and 14.56 trillion won in 2023. Kia aims for 11.5 trillion-12 trillion won in full-year operating profit.

(Updates with third-quarter dividend payout and executives’ comments that the carmaker has no plans to cut EV production despite the market slowdown)

Write to Il-Gue Kim at Black0419@hankyung.com

In-Soo Nam edited this article.