Hyundai Motor and Kia Corp. saw triple-digit gains in their first quarter net profit year-on-year, as key economies headed for recovery and global demands for high value-added models kept up.
The two key affiliates of South Korea’s second-largest conglomerate Hyundai Motor Group held their respective earnings announcement Thursday, revealing the final business figures for the January-March period this year.
The group’s flagship unit and the nation’s top automaker Hyundai Motor saw its quarterly net profit jump to 1.52 trillion won ($1.36 billion), up 175.4 percent from 552.68 billion won a year earlier, the company said in a statement. The figure exceeded the median forecast of 1.32 trillion won suggested by local brokerages.
The company’s operating profit also climbed 91.8 percent to 1.66 trillion won from 863.8 billion won a year earlier. The total revenue rose 8.2 percent during the given period to 27.39 trillion won, of which auto sales accounted for 21.7 trillion won.
In global sales volume, the carmaker sold 1 million units in the first quarter, up 10.7 percent from a year earlier. In the domestic market, the sale volume reached 185,413, up 16.6 percent on-year.
“Sales marked an on-year increase due to the base effect of COVID-19 last year and the market recovery of key economies,” the company said.
The robust sales of sport utility vehicles and premium independent brand Genesis in the overseas markets helped offset the financial impact of the Korean won’s strengthening against the US dollar.
Another bullish factor was that the carmaker reduced inventories and marketing costs in the US market throughout the pandemic, while SUV prices soared on the back of steady demand.
A key challenge down the road, however, is the persisting shortage of automotive semiconductors. Earlier this month, Hyundai Motor had to suspend some of its key assembly lines here. The disruption is expected to affect the production of the company’s bestselling models such as Sonata and Grandeur, as well as Ioniq 5, its first all-electric model to adopt Hyundai Motor Group’s exclusive electric-global modular platform.
Kia, the runner-up car-making affiliate of the group, said in a separate conference call that its quarterly operating profit came to 1.76 trillion won, up 142.2 percent from a year earlier. Net profit soared 289.2 percent during the same period to 1.04 trillion won. Total revenue stood at 16.58 trillion won, up 13.8 percent on-year, as 689,990 car units were sold during the first three months of the year.
The key factor was the uptrend of recreational vehicles, or RVs, which accounted for an unprecedented 59.7 percent of total sales during the quarter, the company explained.
The steepest sales growth was observed in India, where the company rolled out its India-exclusive model Sonet. The American markets, however, saw their sale volume falter slightly as the suspension of Kia’s plant in Gwangju delayed the manufacturing timeline of their Seltos model.
For the remainder of the year, both carmakers predicted that global automotive demands will recover to a certain extent as the epidemic impact alleviates. But the resurgence in some markets, combined with the uncertainties in semiconductor supplies will continue to pose risks on sales volume and profitability.
By Bae Hyun-jung (email@example.com