Hyundai Motor and Kia Achieve Profit at Major Overseas Subsidiaries Last Year... Improvement in Plant Operating Rates

Hyundai Motor Turns Profitable at US Plant and Brazilian Subsidiary After 3 Years
Kia Returns to Profit at US Plant After 4 Years

[Asia Economy Reporter Yoo Hyun-seok] Major overseas subsidiaries of Hyundai Motor Company and Kia recorded profits last year. It appears that improvements in factory operating rates had an impact.

According to the business report recently disclosed by Hyundai Motor on the 21st, the net profit of the U.S. factory subsidiary last year was 237 billion KRW. It turned to a profit from a loss of 1.0191 trillion KRW the previous year.

The U.S. factory also recorded a loss of 228.2 billion KRW in 2019. This marks a turnaround to profit in three years. Along with this, the Brazilian subsidiary recorded a net profit of 41 billion KRW last year. In 2019 and 2020, it recorded net losses of 66.1 billion KRW and 47.3 billion KRW, respectively.

With the U.S. and Brazil turning to profits, all major subsidiaries recorded profits. The U.S. sales subsidiary posted 1.0285 trillion KRW, followed by the India subsidiary (437.4 billion KRW), Czech factory (417.5 billion KRW), Turkey subsidiary (198.5 billion KRW), Russia factory (172.1 billion KRW), Canada subsidiary (117.9 billion KRW), Australia subsidiary (28.1 billion KRW), and Europe subsidiary (11.4 billion KRW) in net profit. Hyundai Motor’s strong overseas performance appears to be influenced by improvements in sales mix and factory operating rates.

The operating rate of the U.S. factory rose from 72.6% in 2020 to 78.8% last year, and the Brazilian factory also increased from 71.7% in 2020 to 89.2% last year. Including the Vietnam factory and domestic factories, Hyundai Motor’s overall factory operating rate last year was 94.1%, up from 84.1% in 2020.

Kia showed a similar trend. According to the audit report, the U.S. factory, which posted a loss of 615.7 billion KRW in 2020, recorded a net profit of 116.5 billion KRW last year. The U.S. factory turned to profit for the first time in four years since 2017. Along with this, other major overseas subsidiaries such as the U.S. subsidiary (855.4 billion KRW), Slovakia factory (299.9 billion KRW), Russia subsidiary (280.3 billion KRW), India subsidiary (185.9 billion KRW), and Mexico subsidiary (88.3 billion KRW) also achieved profits last year following 2020. For Kia as well, improvements in sales mix appear to be the background for realizing these profits, similar to Hyundai Motor.

On the other hand, the Chinese subsidiaries operating joint ventures with local companies have continued to record losses since the 2017 THAAD (Terminal High Altitude Area Defense) incident. However, the loss margin decreased last year. Beijing Hyundai reduced its loss from 1.152 trillion KRW in 2020 to 1.0129 trillion KRW last year, and Dongfeng Yueda Kia reduced its loss from 835.5 billion KRW in 2020 to 783.2 billion KRW last year.