Hyundai Motor to pay quarterly dividends with record Q1 profit

Hyundai Motor Co. on Tuesday reported its largest-ever quarterly profit, which soared a whopping 86.3% from a year earlier, while unveiling a plan to introduce quarterly dividends.

Driven by record-breaking earnings, the South Korean carmaker will begin paying dividends every three months from the current quarter, in addition to the cancellation of its treasury stock over three years from 2023 to 2025.

Its operating profit came to 3.6 trillion won ($2.7 billion) in the January-March period, up 86.3% from a year earlier. The result comfortably beat analysts' forecast of 2.56 trillion won. 

Sales went up 24.7% on-year to 37.8 trillion won ($28 billion) in the quarter. The results were its second-largest quarterly revenue since it posted 38.5 trillion won ($29 billion) in sales in the fourth quarter of last year.

Buoyed by the impressive results, Hyundai said it would allocate 25% of its net profit to dividend payments. It will also retire 1% of its treasury shares every year through 2025.

Including the treasury stock retirement, it will have returned 29% of its profits to shareholders from 2023 to 2025. Its treasury stock holdings represent 4.1% of its shares outstanding.

For 2022, it bumped up dividend payments by 40% to 7,000 won per share, from the previous year’s 5,000 won.

US BATTERY JOINT VENTURE WITH SK

On Tuesday, the Hyundai Motor Group finalized a plan to establish a US battery joint venture with SK On Co. in Bartow County, Georgia as part of its efforts to qualify for US tax credits under the Inflation Reduction Act (IRA).

It is the first time for a South Korean automaker to build a US joint venture with a battery company.

The 50:50 JV will produce battery cells of 35 gigawatts per year, enough to power 300,000 electric vehicles.
 
Hyundai and SK will pour a combined 6.5 trillion won ($5 billion) into the plant, including borrowings by the JV, between 2023 and 2027.

They expect vehicles powered by their batteries to qualify for US tax credits of up to $7,500 per EV. The JV is expected to come online in the second half of 2025.

The cells to be manufactured in the US state of Georgia will be packaged into battery packs by Hyundai Mobis Co. and will fuel EVs of Hyundai Motor, Kia Corp. and Hyundai’s premium brand Genesis.

The EVs will be manufactured at Kia’s Georgia plant and Hyundai’s Alabama facility, as well as their EV-dedicated assembly lines in Georgia, scheduled for completion by 2025.

The JV is also aimed at meeting the US requirements that 50% of the value of battery components must be produced or assembled in North America to qualify for a $3,750 subsidy.

INCENTIVES FOR SK

The IRA also provides incentives for clean energy technology components under the Advanced Manufacturing Production Credit (AMPC).

Once its battery JV begins operation in full swing from 2026, SK will likely receive up to 7 trillion won worth of AMPCs between 2025 and 2032, according to Samsung Securities.

In the January-March period, Hyundai's global car sales increased 13% on-year to 1.02 million units, including its domestic sales.

In the US alone, it chalked up record-breaking sales in both January and February, offsetting a decline in EV sales following the introduction of the IRA last year.

Hyundai Motor's first-quarter profit came in six times that of Samsung Electronics Co., South Korea's largest stock by market capitalization.

The world's No. 1 memory chipmaker reported a 96% plunge to 600 billion won in preliminary first-quarter operating profit.

(Updated with Hyundai's battery joint venture plan with SK)

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

Yeonhee Kim edited this article.