Hyundai Motor Exceeds Analyst Expectations with Strong Q4 Earnings

South Korean company “Hyundai Motor” announced on Thursday a 31% increase in fourth quarter profits last year, which was below analysts’ expectations due to unfavorable exchange rates and non-recurring costs related to the sale of its factory in Russia in December.

Hyundai Motor, the world’s third-largest automaker in terms of sales along with its subsidiary Kia Corp, reported a net profit of 2.2 trillion won ($1.65 billion) from October to December, compared to a profit of 1.7 trillion won in the previous year.

In December, Hyundai Motor said it would incur a loss of 287 billion won ($219.2 million) from the sale of its factory in Russia, where operations have been suspended since March 2022. Hyundai aims to grow revenues by 4-5% this year, with a projected increase of 4.9% in North American car sales, and decreases of 3.7% and 0.6% in car sales in China and Europe, respectively.

It expects an operating profit margin of 8-9%, in line with the previous year. Hyundai Motor stated in a statement, “Hyundai Motor expects the business environment to remain unpredictable due to overall uncertainties in emerging markets and a decline in the real economy.”

Analysts have pointed out that Hyundai, like other car manufacturers, is facing a slowdown in growth due to a difficult economic environment, including high interest rates and inflation, which have pushed cars out of reach for some buyers.

Lee Jae-il, an analyst at Eugene Investment & Securities, said, “It seems that the pent-up demand for cars from limited supply may disappear, as high interest rates have eroded car buyers’ desire to make purchases.”

He added that Hyundai Motor is likely to manage its car inventory more tightly compared to previous years, as pent-up demand fades and excessive inventory will harm its profitability. Hyundai Motor’s shares rose by 2.0% after the announcement of its earnings, surpassing the 0.1% increase of the Kospi index.