Hyundai Motor upgrades full-year outlook on strong Q2 profit

July 26, 2023 (MLN): South Korea's Hyundai Motor Company raised its annual sales and profit margin guidance on Wednesday, after recording a 15% rise in quarterly net profit helped by a weaker won currency, robust sales of electric vehicles (EVs) and increased production, as Reuters reported.

The world's No.3 automaker by sales together with affiliate Kia Corp forecast 2023 revenue would grow 14-15%, up from its January guidance of 10.5-11.5%, while its operating profit margin was upwardly revised to a range of 8-9% from 6.5-7.5%.

"The company expects to strengthen sales momentum through production improvements as chip and component supplies stabilize worldwide and enhance profitability despite global uncertainties such as interest rate fluctuations," Hyundai said in a statement.

Its upbeat outlook comes amid growing concerns about cooling vehicle demand due to high-interest rates and economic slowdown, with some of its rivals indicating price cuts to drive volume growth.

Tesla CEO Elon Musk signaled last week that it would cut prices again on EVs in "turbulent times" to boost sales.

Hyundai said vehicle sales rose 8.5% to 1.06 million units in the second quarter, with EV sales soaring 47% to nearly 78,000 units.

In the United States, Hyundai's biggest market, sales of green energy cars that include EVs and plug-in hybrids more than doubled to 46,000 units.

Sales climbed even though Hyundai's EVs are not eligible for federal tax credits under the Inflation Reduction Act (IRA) as they do not meet requirements.

The IRA requires 50% of the value of battery components to be produced or assembled in North America to qualify for a $3,750 credit and 40% of the value of critical minerals sourced from the United States or a free trade partner for a separate $3,750 credit.

Shares in Hyundai Motor fell 1.5% after the result, in line with the broader market.

Hyundai said last month it planned to boost EV production in the United States to three-quarters of its total production there by 2030 from just 0.7% now.

The maker of the popular IONIQ 5 EV and luxury Genesis G70 sedan reported a net profit of 3.2 trillion won ($2.50 billion) for the April-June period, versus a 2.8tr won profit a year earlier.

That compared with a 3.3tr won profit estimate from 19 analysts compiled by Refinitiv SmartEstimate, weighted toward more consistently accurate analysts. Revenue rose 17% on-year to 42tr won.

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