Daily Management Review

Surge In Demand For Its SUVs And Luxury Cars Pushes Hyundai Q1 Profit To 4 Year High


Surge In Demand For Its SUVs And Luxury Cars Pushes Hyundai Q1 Profit To 4 Year High
A huge 187 per cent jump in its net profits for the first quarter of the current year was reported by the South Korean auto giant Hyundai Motor Co which was in line with the expectations of the market, the company said on Thursday. Hyundai attributed the performance to a strong demand for the company’s sports-utility vehicles that delivered high profit margins as well as its Genesis cars that are general priced at a premium.
However this growth momentum is threatened to be derailed by the continued global shortage of semiconductors used in cars.
For the quarter between January and March of this year, a net profit of 1.3 trillion won ($1.16 billion) was reported by the company compared to a new profit of 463 billion in the same quarter a year earlier. Hyundai along with its affiliate auto company Kia Corp is among the top 10 auto makers of the world in terms of sales.
In comparison, a forecast of analysts in the Refinitiv SmartEstimate had pegged the company’s net profits to be around 1.3 trillion won. This number was also the highest for the company for any quarter since the March quarter of 2017.
There was a 8.2 per cent growth in the revenues of the company during the quarter at 27.4 trillion won.
During the first quarter, the stand out performance for the company was exhibited by Hyundai's pricier cars such as SUVs as well as the luxury Genesis model which is from the company’s luxury stable.
Hyundai also managed to remain mostly unaffected by the global shortage of auto chips during the first quarter because of its strong inventory of chips, even as some of its major automotive rivals including Volkswagen and General Motors were forced to curb down in production because of the acute shortage of semiconductors that are used in cars.
However recent reports have suggested that the chip shortage has started to also affect the South Korean automaker and the company has been forced to temporarily halt production three times while also saving up the semiconductors in its inventory for the most popular and profitable models only.
The stocks of the Hyundai Motor, the fifth largest auto maker by market value of Asia rose by 2 per cent on Thursday on the back of the good results while the wider market gained only 0.2 per cent.
So far this year the stocks of the company have gained by almost 20 per cent – making it the third-best performer among large Asian automakers.