Hyundai reported a 3.2 per cent decline in third-quarter wholesale deliveries, with profits falling short of estimates. The company aims to expand hyb
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Hyundai Motor Co. reported third-quarter profit that fell short of analysts’ estimates as tepid vehicle sales around the globe, and expanded geopolitical risks eroded earnings.
Operating profit was 3.58 trillion won ($2.6 billion) for the three months to September, down 6.5 per cent from a year earlier, the South Korean automaker said Thursday. That missed the $3.9 trillion won estimated by analysts. Sales rose 4.7 percent to 42.9 trillion won during the same period.
The decline in earnings reflected a one-off expense of about 320 billion won related to preemptive warranty extensions, the company said in its earnings statement.
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South Korea’s top carmaker has pledged to ramp up production of hybrids as the global automotive sector faces persistent weakness in demand for EVs amid higher interest rates and slowing economic growth. The industry is also facing increased uncertainty in the run-up to the US presidential election, with the candidates promising diverging policies for everything from EVs to emissions rules to domestic manufacturing.
While Hyundai believes it can meet its earnings guidance for this year, heightened geopolitical risks, escalating competition and policy uncertainties around the globe are putting downward pressure on its short-term profitability, Lee Seung Jo, chief financial officer and head of the planning & finance division, said during a conference call.
“The fourth-quarter business environment doesn’t look too favorable, so we’d have to pull all our efforts to boost both retail and wholesale deliveries,” Lee told investors. “Still, we’ve pledged to keep our operating profit margin. between 8 per cent – 9 per cent, and we believe we can maintain that target going forward.”
The company’s operating margin was 8.3 per cent in the third quarter.
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While overseas auto sales dropped during the third quarter, strong sales of sport utility vehicles, hybrids and its luxury brand Genesis kept Hyundai’s average sales price higher, Yoon Hyuk Jin, an analyst at SK Securities Co., wrote in a note before the earnings announcement. .
Shares dropped as much as 5.4 per cent in Seoul trading following the announcement. The company fell more than 17 percent in the third quarter, the first quarterly decline in a year.
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Wholesale deliveries during the third quarter were slightly over 1 million, down 3.2 per cent from a year ago. Unit sales in North America climbed 9.3 per cent, while those in Europe lost 9.5 per cent. China saw a 61 per cent plunge, while India posted a 5.7 per cent decrease.
During its annual investor event in August, Hyundai said it plans to double its lineup of hybrid cars, while keeping its 2030 EV sales target unchanged at 2 million a year. The company has also announced a 4 trillion won share buyback measure as part of its efforts to improve investor returns.
Earlier this week, Hyundai completed listing shares of its India unit, which became the largest-ever initial public offering in the South Asian country. The Korean firm sold a 17.5 per cent stake in the unit, seeking to benefit from the frenzy for share sales in India, one of the world’s most vibrant areas for listings this years.
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First Published Date: 05 Nov 2024, 11:23 AM IST
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