Hyundai Motor sees surprise Q3 after record quarterly sales, profit

South Korea’s top automaker Hyundai Motor Co. on Thursday posted its highest-ever quarterly sales and operating profit, 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 will likely continue to surprise the market with its decent earnings in the third quarter, given the order backlog and the growing popularity of its SUVs and premium Genesis models, industry officials said.

Sales in the April-June period reached a quarterly record high of 36 trillion won ($27.5 billion) on a consolidated basis, up 18.7% from a year earlier, Hyundai said in a regulatory filing.

Consolidated operating profit rose 58% to an all-time high of 2.98 trillion won from 1.89 trillion won, while net profit increased 56% to 3.09 trillion won from 1.98 trillion won.

The second-quarter results beat market expectations.

“A combination of increased sales of high-end Genesis and SUV models, friendly exchange rates, low inventory levels and reduced incentives for dealers in major markets offset the negative impact of the global chip shortage and higher raw materials prices," Hyundai Motor said in a statement.

Reflecting fiercer competition with rivals, the company’s global sales volume declined 5.3% on year to 976,350 vehicles in the second quarter.

Hyundai’s SUVs, including the Tucson, IONIQ 5, and Palisade, accounted for 52.4% of its entire vehicle sales in the second quarter, up 5.1 percentage points from a year earlier.

Its premium line, the Genesis, took up 5.4% of its car sales, up from 5.3% in the previous year. Sales of the flagship Genesis G90 sedan increased 197.5% on the year, while Hyundai’s electric vehicle sales rose 49.1%.

The Korean currency’s 12.3% fall versus the dollar in the second quarter from the year-earlier period also helped Hyundai’s profits, boosting the value of their earnings gained abroad.

Second-quarter operating profit margin stood at 8.3%, compared with 6.2% in the year-earlier period.

BRIGHTER Q3

Looking ahead, company executives said they expect the easing automotive chip shortage to increase its car production.

“The list of our customers awaiting our new cars in the US and Europe is getting longer,” said Koo Za-yong, Hyundai’s senior vice president, during an earnings conference call with analysts.

“Despite the shrinking market in the US, demand for SUVs is growing. From October, we will also roll out the Santa Fe Hybrid from our US plant in Alabama, responding to market demand more swiftly.”

In May, Hyundai said its premium Genesis brand saw considerable growth in its US car sales as all other major carmakers reported a significant drop amid a continued automotive chip shortage.

Strong retail demand has also lowered the Korean carmaker’s global car inventory to a record-low level, and slashed incentives offered to dealers.

Hyundai’s rise to become one of the coveted automakers in the US market has been driven by sport utility vehicles and premium Genesis models, and now by electric vehicles.

The company said it will strengthen its EV lineup, including the recently launched IONIQ 6, which it hopes will continue to drive its earnings higher in the third quarter.

Hyundai Motor said while it expects the global automotive chip shortage to ease, business conditions will remain tough, which will likely boost its marketing costs for the rest of the year.

In a bid to build investor confidence, the company said it maintains its annual sales target. Earlier this year, it unveiled ambitious annual guidance that projects a revenue increase of 13-14% and an operating profit margin of 5.5-6.5% for 2022. It also said it aims to sell over 4.3 million cars globally this year, up 10.5% from last year.

The automaker plans to double its EV lineup to 13 by 2030 from the current six models – three from Hyundai and three from the luxury Genesis brand.

Write to Il-Gue Kim and Hyung-Kyu Kim at Black0419@hankyung.com
In-Soo Nam edited this article.