Hyundai profit falls less than expected
SEOUL: Hyundai Motor Co reported a smaller-than-expected drop in profit on high-margin domestic sales and said, while demand should pick up soon, the pace of recovery would be slow due to the impact of the coronavirus pandemic.
Hyundai, which together with sister company Kia Motors Corp, is the world’s fifth-largest automaker, said weakness in both mature and developing economies “means auto sales may only recover to 2019 levels around 2023.’’
“Auto demand is expected to pick up from the third quarter, but economic recession impact from Covid-19 and uncertainties around re-proliferation remain,” chief financial officer Kim Sang-hyun said.
Hyundai will not pay interim dividends this year due to the uncertainty and need to secure capital as it unveiled its results for the second quarter yesterday.
Net profit for April-June fell to 227 billion won ($189.53 million) from 919 billion won in the same period a year earlier. That compared with the 275 billion won average of 16 analyst estimates compiled by Refinitiv.
Revenue fell 19% to 21.8 trillion won, while operating profit dropped 52% to 590 billion won.
The results were buoyed by sales in South Korea, which rose 13% from a year earlier to 200,000 vehicles, led by demand for large cars and sportutility vehicles (SUVs) such as the G80 sedan and GV80 SUV from premium brand Genesis.
Hyundai’s global retail sales fell 33% for the period, which included doubledigit percentage sales drops in markets such as the United States, China, Europe and India.
South Korea has surpassed China and the United States as the top market for Hyundai, after the country managed the Covid-19 outbreak better than others and extended auto tax cuts.
“Investors see this as Hyundai being one of the few that can pursue R&D while competitors’ business environment is very unstable,” Shinhan Investment Corp analyst Jung Yong-jin said.
“Except for Tesla, Hyundai and Kia, other automakers are expected to report losses this quarter,’’ the analyst added.