Hyundai Motor Q4 net profit jumps on Genesis, high-end SUVs

Hyundai Motor Co. on Tuesday reported a 78% jump in its fourth-quarter net profit, driven by robust sales of its luxury Genesis models and high-end sport utility vehicles.

In a bid to build investor confidence, the top South Korean automaker also unveiled its first annual guidance that projects a 14%-15% increase in auto sales and an operating profit margin of 4%-5% for 2021.

Its net profit for the October-December quarter of 2020 reached 1.38 trillion won ($1.25 billion), up 78% from 772 billion won in the year-earlier period, according to Hyundai Motor’s regulatory filing on Jan. 26.

Operating profit rose 41% to 1.64 trillion won from 1.16 trillion won. The result marks the highest profit since the second quarter of 2016 when it posted 1.76 trillion won in operating profit. The result, however, fell short of the market consensus of 1.71 trillion won.

The fourth-quarter profit margin stood at 5.6%, the highest since the third quarter of 2017 when the carmaker ran a margin of 5%.

Revenue increased 5.1% to 29.24 trillion won from 27.82 trillion won, although its global auto sales volume fell 4.7% on the year.

“Despite the decline in auto sales amid the pandemic and the negative impact of the strong Korean currency, we were able to post improved earnings due to increased sales of high-end models such as the Genesis GV80 SUV and the G80 sedan,” the company said in a statement.

The local currency strengthened to 1,118 won per dollar in the fourth quarter of 2020 from 1,176 won in the year-earlier period. A stronger won erodes the automaker’s overseas earnings and lowers its price-competitiveness.

Q3 ONE-OFF CHARGES HURT FULL-YEAR PROFIT

For all of 2020, net profit fell 34% to 2.11 trillion won from 3.18 trillion won a year earlier and revenue dropped 1.7% to 104 trillion won, weighed by the global lockdown and suspension of some production plants.

Full-year operating profit shed 23% on year to 2.78 trillion won.

The company’s full-year earnings were particularly affected by the figures of the third quarter, when it posted an operating loss of 313.8 billion won after it booked 2.14 trillion won in one-off charges related to its faulty engines.

Since Chairman Chung Euisun took the helm of the automotive group in October last year, Hyundai has been actively pushing for the development of electric vehicles, hydrogen fuel cell cars and future mobility platforms to get ahead of its rivals.

More recently, the company is also said to be in the early stages of discussions with Apple Inc. to jointly develop and produce self-driving electric cars to advance into the global autonomous EV market.

AIM HIGH DESPITE TOUGH CONDITIONS

Hyundai Motor said it expects difficult business conditions, including a strong local currency and the fallout of the pandemic, to continue throughout this year.

Despite the tough business environment, however, the automaker said it aims to sell 4.16 million cars globally this year, up 11.1% from 2020. Its car sales in China, the world’s largest auto market, will increase 27.6%, it said.

The automaker, which launched a new platform dedicated for EVs last month, said on Tuesday it will unveil its latest electric model IONIQ 5 in Europe in March and then in Korea and the US.

For all of 2021, Hyundai plans to sell 160,000 electric cars globally, up 60% from the previous year.

It targets to achieve a car sales revenue growth rate of 14%-15% with an operating profit margin of 4%-5% in 2021.

To achieve that goal, the company said it plans to spend 8.9 trillion won, including 3.5 trillion won in research and development, this year.

Shares of Hyundai Motor finished down 3.3% at 251,500 won on Tuesday, underperforming the broader market’s 2.1% fall.

Write to Il-Gue Kim and Byung-Uk Do at Black0419@hankyung.com
In-Soo Nam edited this article.