Hyundai Motor Q1 Operating Profit 1.65 Trillion Won, Up 91% YoY
Genesis Sales Surge, SUV Sales Also Increase
Vehicle Semiconductor Supply Issues Remain Risk Factor
[Asia Economy Reporters Changhwan Lee and Gimin Lee] Hyundai Motor Company recorded strong performance in the first quarter as sales of high value-added vehicles such as Genesis and sport utility vehicles (SUVs) increased. However, uncertainties in management remain in the second quarter due to the shortage of automotive semiconductors and concerns over the resurgence of COVID-19.
On the 22nd, Hyundai Motor announced that its first-quarter sales revenue reached 27.3909 trillion KRW, with an operating profit of 1.6566 trillion KRW. Compared to the same period last year, sales revenue increased by 8.2%, and operating profit surged by 91.8%.
In the global market, Hyundai sold 1,000,281 units on a wholesale basis in the first quarter, marking a 10.7% increase compared to the same period last year.
In the domestic market, sales rose by 16.6% year-on-year to 185,413 units, driven by industrial demand recovery and strong sales of new models such as Tucson and GV70.
Hyundai’s domestic sales in the first quarter reached 185,413 units, up 16.6% from the previous year. Genesis sales surged dramatically, with domestic sales in the first quarter hitting 32,884 units, a 165.3% increase compared to the same period last year.
The share of Genesis in domestic sales also skyrocketed from 7.8% in the first quarter of last year to 17.8% in the first quarter of this year. Genesis exports also improved significantly, rising 277.4% from 3,006 units in the first quarter of last year to 11,345 units in the first quarter of this year.
This increase in exports is attributed to the positive reception of Genesis in the United States. Total sales combining domestic and export markets in the first quarter reached 997,882 units, a 10.5% increase year-on-year.
Despite weak sales in some markets such as Europe due to the impact of COVID-19, overseas sales increased by 9.5% year-on-year to 814,868 units, supported by recovery in emerging markets like India and Latin America.
A Hyundai Motor official stated, "First-quarter sales increased compared to the same period last year due to the base effect from last year’s COVID-19 and the recovery in sales in major countries. Operating profit continued to recover despite unfavorable exchange rates, thanks to increased sales volume and improved sales mix."
The official added, "In the first quarter of 2021, the expanded sales proportion of high value-added products such as Genesis and SUVs compared to the same period last year led to improved profitability."
Demand Recovery Evident but Management Conditions Remain Challenging Due to Semiconductor Issues
Regarding future management environment prospects, Hyundai Motor expects demand recovery due to expanded economic stimulus policies in major countries and base effects. However, it anticipates that difficult management conditions will persist due to the global shortage of automotive semiconductors, ongoing COVID-19 impacts, and rising raw material prices.
In response to the global automotive semiconductor shortage, Hyundai plans to minimize production disruptions by pursuing alternative component sourcing, securing inventory proactively through annual orders, and flexibly adjusting production plans. Nevertheless, it expressed concerns that production disruptions due to semiconductor shortages will be unavoidable from the second quarter onward.
Additionally, the sustainability of demand recovery remains uncertain due to the resurgence of COVID-19 in emerging countries such as India and Latin America, which had driven sales recovery in the first quarter. External factors such as increased exchange rate volatility and rising raw material prices are expected to pose burdens on business activities.
Meanwhile, Hyundai explained that despite the continued external risks and challenging management environment, it plans to maintain the trend of improving profitability and competitiveness through the successful global market establishment of key new models such as Tucson, GV70, and Ioniq 5.
Furthermore, Hyundai intends to make this year the first full-fledged year for eco-friendly vehicle sales. It plans to launch dedicated electric vehicles like the Ioniq 5, as well as hybrid and plug-in hybrid models of Tucson and Santa Fe in key markets to respond to strengthening environmental regulations and solidify its leadership in electrification.
"Semiconductor Shortage in May Similar to April... Production Adjustments Expected"
Hyundai expressed concerns that some vehicle production may be halted next month due to the shortage of automotive semiconductors.
Seoganghyun, Vice President and Head of Hyundai Motor’s Finance Division, said during the earnings conference call held that day, "We managed semiconductor parts company-wide to minimize production disruptions, so there were no large-scale shutdowns in the first quarter, and the impact on production was minimal. However, next month, production adjustments similar to or greater than this month are expected."
Hyundai had suspended operations at Ulsan Plant 1, Asan Plant, and some overseas plants this month due to semiconductor supply difficulties. Vice President Seo commented, "The semiconductor supply difficulties are prolonged due to external factors despite the recovery in automobile demand. We see the possibility of production plan adjustments."
He added, "We will strive to minimize production disruptions by prioritizing items, developing alternative components, securing inventory through annual orders, and adjusting production plans."
He also said, "It is currently difficult to determine the annual production plan due to the semiconductor shortage. We will explain related details to investors in the future."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
