Korean automaker sees outlook improving as new tariff deal removes uncertainty
Hyundai Motor said Thursday that the tariff agreement between Korea and the United States clears uncertainties moving forward, as the automaker’s third-quarter operating profit suffered nearly a 30 percent decline on-year, despite logging record revenue.
The Korean automaker logged 46.7 trillion won ($32.8 billion) in revenue and 2.5 trillion won of operating profit in the third quarter of this year, up 8.8 percent and down 29.2 percent, respectively, from the same period last year, marking the company’s largest-ever third-quarter revenue.
The steep downturn in operating profit occurred due to 25 percent tariffs taking effect on the automaker’s US sales in the third quarter, as the company exhausted inventory that had been exported to the US prior to the tariff imposition in April.
Hyundai Motor sold 1.04 million cars across the world in the July-to-September period. Despite the record quarterly revenue, its operating profit rate slipped to 5.4 percent, down 2.9 percentage points on year.
“We reached the largest third quarter revenue by expanding global auto sales based on strategic responses to market fluctuations and strong business fundamentals,” said Hyundai Motor Co. CEO Jose Munoz.
“Although the operating profit was affected by tariffs and an increase in incentives due to intensifying competition, Hyundai Motor is preparing the groundwork to increase profitability through the optimization of production strategies and the diversification of powertrains.”
The company sold about 857,795 vehicles outside Korea in the third quarter, as some 257,446 of them came from the United States. Sales of eco-friendly vehicles were driven by the expansion of electric vehicle sales centered on Europe and its strengthened hybrid lineup, as the automaker sold 252,343 eco-friendly cars. Of them, 76,153 were electric vehicles.
Lee Seung-jo, Hyundai Motor’s chief finance officer, noted in a conference call that new models will be launched in the fourth quarter and next year and there will be an increase in the proportion of hybrid models.
“The vehicle model cycle is entering a golden time, where new cars continuously come out,” he said. “Once new cars are rolled out, (the sales) mix will keep improving.”
With preemptive and active contingency measures, Hyundai Motor reiterated its will to meet its annual guidance of hitting a 5 to 6 percent increase in revenue and 6 to 7 percent in operating profit, which was announced at its CEO Investor Day event last month.
The company set its third-quarter common stock dividends at 2,500 won per share, up 25 percent from the same period of last year, vowing to carry out shareholder return policies.
hwkan@heraldcorp.com
