Hyundai Motor cuts full-year sales and margin targets after Q3 revenue falls 3.4%

Hyundai Motor said on 29 October that third-quarter operating profit rose 5.5% to 2.6772 trillion won from 2.537 trillion won a year earlier. Revenue fell 3.4% to 45.1102 trillion won from 46.721 trillion won, and operating margin rose 0.5 percentage point to 5.9%. Total net profit fell 24.2% to 1.9317 trillion won, the regulatory filing showed. Net income attributable to parent-company shareholders fell 24.6% to 1.704 trillion won, RTTNews reported.

Global wholesale sales fell 11.3% to 920,710 vehicles, Hyundai reported. An updated Financial News report listed 927,010 vehicles for the same percentage decline. Domestic sales fell 27.2% to 131,468 and overseas sales fell 8% to 789,242.

Full-year targets cut

Hyundai cut its full-year global wholesale sales target by 158,300 vehicles, or about 3.8%, to 4 million from 4.1583 million. It lowered its full-year operating margin target to 5.5% to 6.5% from 6.3% to 7.3%, trimming both ends by 0.8 percentage point. It kept its full-year revenue growth target at 1% to 2% and cut automotive investment to 16 trillion won from 17.8 trillion won, a 10.1% reduction.

Hyundai blamed labor strikes, fewer working days around Chuseok and a fire at a parts supplier for the volume drop. It said the guidance revision reflects rising raw-material costs and production setbacks, not a loss of competitiveness. CFO Lee Seung-jo said production disruptions at domestic plants reduced domestic sales and shipments to key overseas markets. He said weaker Middle East sales amid geopolitical uncertainty caused an estimated 1.1 trillion won hit to earnings compared with a year earlier.

Hybrids and exchange rates support profit

Hybrid sales rose 3.8%, or about 6,000 units, to 167,414 vehicles, and accounted for 18.2% of global sales, up 2.7 percentage points, the company said. Battery electric sales fell 9.2% to 69,117, and total electrified sales slipped 2.7% to 245,540. The average won-dollar rate was 1,423 won, up 2.8% from a year earlier. Maeil Business Newspaper reported that the weaker won added as much as 500 billion won to operating profit.

The cost-of-sales ratio climbed 1.5 percentage points to 83.8%, while selling, general and administrative expenses fell 2.0 percentage points to 10.3% of revenue, the company said. Maeil Business Newspaper reported that lower sales reduced revenue by 3.435 trillion won, higher incentives in major markets took another 685.1 billion won, and the decline was Hyundai's first year-on-year revenue drop in 25 quarters, since the second quarter of 2020.

Fourth-quarter recovery

For the first nine months, operating profit fell 17.7% to 8.04 trillion won even as sales edged up 0.6% to 140.26 trillion won, according to the filing. Hyundai said domestic production began returning to normal in September. It expects fourth-quarter sales to improve with the new Avante, Tucson, Genesis GV90 and GV80 Hybrid.

Lee Seung-jo, executive vice president, said on the call that Hyundai expects increased sales of the new Avante and Tucson, the Genesis GV90 and a better product mix after the GV80 Hybrid launch. He said the company will work to cut cost pressures and improve profitability by reducing incentives as new models launch.

Hyundai declared a third-quarter dividend of 2,500 won per share, payable on 30 December. It said U.S. tariffs, raw material costs and competition remain headwinds.