Hyundai Motor’s Q4 net profit rises 31%, misses forecasts

SOUTH Korea’s Hyundai Motor on Thursday (Jan 25) reported a 31 per cent rise in fourth-quarter profit that missed analyst expectations due to unfavourable exchange rates as well as one-off costs related to the sale of its Russia plant in December.

Hyundai Motor, the world’s No 3 automaker by sales with its affiliate Kia, reported a net profit of 2.2 trillion won (S$2.2 billion) for the October to December period versus a profit of 1.7 trillion won a year earlier.

That compared with a 2.9 trillion won average forecast by LSEG SmartEstimate, which is weighted towards estimates from analysts who are more consistently accurate.

In December, Hyundai Motor said it would take a 287 billion won loss on selling its plant in Russia, where operations have been suspended since March 2022.

Hyundai is targeting revenue growth of 4 to 5 per cent this year. It expects a 4.9 per cent jump in North American vehicle sales but a 3.7 per cent drop and 0.6 per cent fall in vehicle sales in China and Europe, respectively.

It predicted an operating profit margin between 8.0 per cent and 9.0 per cent in line with last year.

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“Hyundai Motor expects the business environment will remain difficult to predict, due to macro uncertainties centred on emerging markets and a downturn in the real economy,” Hyundai Motor said.

Analysts noted that like other automakers, Hyundai is grappling with slowing growth due to a difficult economic environment, including high interest rates and inflation that have pushed vehicles out of the reach of some buyers.

“It appears that pent-up demand for vehicles from limited supplies has been disappearing as high interest rates eat away car buyers’ willingness to purchase,” said Lee Jae-il, an analyst at Eugene Investment & Securities.

Lee added that Hyundai Motor would likely manage its vehicle inventory level more tightly than previous years as pent-up demand has disappearing and excessive inventories would hurt its profitability.

Shares in Hyundai Motor were trading up 2 per cent after it reported its earnings, outperforming 0.1 rise for the benchmark Kospi. REUTERS