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Quarterly earnings

Hyundai Motor reports Q3 loss on $2 bn provisioning

By Oct 26, 2020 (Gmt+09:00)

Hyundai Motor Co. turned to an operating loss in the third quarter, after it booked 2.1 trillion won ($1.9 billion) as one-off charges related to its faulty engines, the South Korean carmaker said on Oct. 26.

The company posted a quarterly loss of 313.8 billion won ($278.1 million) compared to Q2 operating profit of 590.3 billion won.

The shift to loss is partially owing to reduced sales in the aftermath of the coronavirus crisis, but primarily on account of the provisional expenses worth 2.1 trillion won related to its defective engines.

Without reflecting the provisioning cost, market consensus was that Hyundai Motor would report 945.8 billion won in operating profit, according to Yonhap Infomax.

“Without the quality costs, the company's third-quarter operating profit would have been far above previous market estimates,” said a company source.

The carmaker also posted a net loss of 188.8 billion won in the July to September period.

Meanwhile, its sales were up 2.3% on year to 27.5 trillion won in the third quarter, despite a decline in global shipments.

The world’s fifth-largest carmaker, when combined with its sister firm Kia Motors Corp., sold 798,791 units, a 15% drop from the same period last year.

In the domestic market, it sold 199,051 units, a 21.9% increase from the same period last year thanks to recovery in demand and the launch of new high-end SUV Genesis models, such as the GV80 and the G80. 

A number of major countries have lifted their lockdown measures, but Hyundai Motor continues to see reserved growth compared to last year due to the COVID-19 impact. 

The company plans to improve profitability by rolling out new automobile lineups and enhancing regional sales strategies. 

Write to Il-gue Kim and Byung-uk Do at black0419@hankyung.com

Danbee Lee edited this article.

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