On the 24th (Monday), Hyundai Motor held a conference call at its headquarters in Seoul to discuss performance results, announcing its Q3 2022 figures showing sales of 1,025,008 units, revenue of 37.705 trillion won (29.553 trillion won from automotive, 8.1518 trillion won from finance and others), operating profit of 1.5518 trillion won, ordinary profit of 2.042 trillion won, and net income of 1.4115 trillion won (including non-controlling interests).
Hyundai’s sales in Q3 2022 increased compared to the same period last year due to an easing of the supply of global vehicle semiconductors and other parts. However, operating profit decreased year-on-year despite an increase in sales volume, improvement in the mix focusing on high-value models, reduced incentives, and favorable exchange rates due to additional quality costs related to the recently announced Theta 2 GDI engine.
A Hyundai official stated, “While production is increasing due to improved semiconductor supply shortages, the inventory levels in key markets remain very low, leading to a continuous decline in incentives.” They also noted that while the supply shortage situation shows signs of recovery, management uncertainties due to geopolitical risks and rising interest rates are expected to persist in the future.
Hyundai has revised its ‘2022 annual performance guidance’ announced last January, reflecting various internal and external changes in the business environment.
The annual wholesale sales target for 2022 has been adjusted down from 4.32 million units to 4.01 million units, considering the impact of geopolitical risks and the prolonged semiconductor supply shortage. In contrast, the growth rate of consolidated revenue compared to the previous year has been raised from the original target of 13-14% to 19-20%, due to favorable exchange rates and continuous improvements in sales mix.
Additionally, the target for the consolidated operating profit margin for 2022 has also been adjusted upward from the previous estimate of 5.5-6.5% to 6.5-7.5%. Even with the reflection of 1.3602 trillion won in quality costs related to the Theta 2 GDI engine in Q3, proactive efforts to improve profitability through continuous improvements in sales mix and a reduction in incentives are accounted for.
A Hyundai official mentioned, “Although several management uncertainties persist, the supply situation of automotive semiconductors is gradually improving, and Q4 sales are expected to increase compared to Q3,” adding, “Despite the quality costs reflected in Q3, we anticipate achieving record-high annual revenue and operating profit.”
In Q3 2022 (July to September), Hyundai sold 1,025,008 vehicles in the global market, a 14.0% increase compared to the same period last year. (※ Based on wholesale sales)
In the domestic market, despite being in a seasonal slump, strong sales of new models such as the dedicated electric vehicle Ioniq 6, launched in July, and the Genesis G90, along with robust sales of high-value models like the Grandeur and GV80, led to a 5.0% increase, with 162,439 units sold compared to the same period last year.
In the overseas market, production increased due to improved supply of components, including semiconductors, as well as strong sales of eco-friendly vehicles in the US and Europe, resulting in a 15.9% increase, with 862,569 units sold compared to the same period last year.
Revenue totaled 37.705 trillion won, reflecting a 30.6% increase compared to the same period last year. The increases in sales, improved sales mix centered around Genesis and SUVs, reduced incentives, and favorable exchange rates contributed to the rise in sales. The average exchange rate for the US dollar to won in Q3 2022 was recorded at 1,338 won, up 15.6% YoY.
The cost of sales ratio posted 80.5%, down 1.4 percentage points from the same period last year. Despite rising raw material prices, the increase in plant utilization and favorable exchange rates led to a decrease YoY. Selling and administrative expenses rose due to increased selling warranty costs related to the Theta 2 GDI engine quality costs and rising marketing costs for new models. The ratio of selling and administrative expenses to sales was recorded at 15.4%, up 2.8 percentage points from the same period last year.
As a result, operating profit for Q3 2022 was recorded at 1.5518 trillion won, a 3.4% decrease compared to the same period last year. The operating profit margin was 4.1%.
Ordinary profit and net profit were recorded at 2.042 trillion won and 1.4115 trillion won, respectively.
The cumulative performance for Q3 (January to September) is recorded at ▲sales 2,904,049 units ▲revenue 104.039 trillion won ▲operating profit 6.4605 trillion won.
Regarding future prospects, Hyundai expects improvements in the supply situation of semiconductors and components, as well as gradual production increases. However, global uncertainties remain due to soaring raw material prices caused by inter-country conflicts, concerns over the resurgence of COVID-19, expanding inflation, and rising interest rates, leading to a challenging management environment.
Furthermore, increased marketing costs due to volatility in exchange rates and intensified competition among companies are also identified as burdens on business activities.
Looking ahead, the global automotive market is expected to continue exhibiting high growth in the eco-friendly vehicle sector, primarily driven by strengthening environmental regulations in major countries, increased investments in eco-friendly infrastructure, and expanding preferences for eco-friendly vehicles.
In this regard, Hyundai plans to expand electric vehicle sales through the launch of the dedicated electric vehicle ‘Ioniq 6’ in the European market in Q4, maximize sales through production and sales optimization, and focus on expanding share and defending profitability through improvements in the sales mix centered on high-value models, including the successful launch of the 7th generation Grandeur after six years.
Written by Lee Sang-jin daedusj@autodiary.kr