Hyundai Motor raises full-year sales target as recall halves third-quarter revenue


[Photo by MK DB]

South Korea’s Hyundai Motor Co. estimated stronger annual sales with annual growth of around 20% for 2022 on favorable exchange rate conditions and an easing chip shortage that has helped car sales green and premium, although they were defeated in the third quarter by the provision linked to the recall cost for the Theta 2 GDi engine.

The South Korean auto giant on Monday reported operating profit of 1.55 trillion won ($1.1 billion) in the third quarter ended Sept. 30, 2022, down 47.9% from a year ago. three months and 3.4% compared to the previous year. The loss was largely due to the provision of 1.36 trillion won for faulty engine recall costs.

The operating margin recorded 4.1%, down 1.5 percentage points from a year ago.

Revenue rose 4.7% quarter on quarter and 30.6% year on year to 37.7 trillion won, renewing the three-month high of 36 trillion won in the prior quarter.

Net income stopped at 1.4 trillion won, down 54.2% quarter on quarter and 5.1% year on year.

Shares of Hyundai Motor fell 3.3% to close at 161,500 won on Monday.

Last week, the company announced the reflection on the loss reserves of 1.36 trillion won related to Theta 2 engine quality issues in the third quarter account. Kia, which also used the same engine, also reserves 1.54 trillion won in loss reserves.

Without the provision, analysts estimated its third-quarter operating profit would be 3.3 trillion won on sales of 36 trillion won. The automaker maintained a strong first-half profit streak.

The automaker said its global sales rose 14.0% in the third quarter as the shortage of auto chips eased.

It revised the sales outlook for the whole of 2022 up on the projection of a better fourth quarter.

It estimates it will sell 4.01 million vehicles this year, down slightly from the target of 4.32 million units set in January. Revenues would increase by around 20% compared to last year, which is higher than the 13-14% estimated at the start of the year thanks to favorable exchange conditions and robust green and premium fleet sales. The operating margin estimate was raised to 6.5 from 7.5%.

By Cho Jee Hyun

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