Hyundai has biggest profit in seven years, warns about chip shortage


Hyundai loniq electric

SEOUL: Hyundai Motor Co posted its biggest profit in seven years, helped by sales of luxury Genesis cars and Ioniq 5 electric vehicles (EVs), but warned that global chip shortage could impact third-quarter deliveries.

Operating profit rose to 1.89 trillion won (US$1.64bil or RM6.9bil) in the three months ended June 30 from 590 billion won (RM2.2bil) a year earlier – the highest since the second quarter of 2014, according to the South Korean automaker.

The result was in line with the average analyst estimate of 1.9 trillion won (RM7bil), according to data compiled by Bloomberg.

As countries from the UK to France look to phase out fossil-fuelled cars, Hyundai is joining global rivals such as Volkswagen AG in turning to low-emission vehicles for growth.

It started selling the Ioniq 5 EV in Europe and the United States this year – the first vehicle produced on its dedicated EV platform –and plans to have more than 12 electric models by 2025.

Hyundai temporarily halted production at its plants globally in the quarter amid the ongoing chip shortage. To minimise the impact, it reduced output of less popular models such as Sonata sedans. Higher raw material costs, such as rubber and steel, are also expected to impact automakers.

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“Disruptions in output in May and June are expected to have some impact on sales in the third quarter due to lower inventory,” executive vice-president Gang Hyun Seo said on a call with analysts.

“Raw material prices are increasing and this could affect earnings in the second half.”

Hyundai shares closed 0.2% higher in Seoul trading yesterday. The stock has risen 19% this year, compared with a 13% gain in the benchmark Kospi index.

The shortage of some semiconductors is expected to gradually improve as soon as this quarter, Seo said. The company has shifted to securing chip supplies on an annual basis to help minimise production disruptions, he added, and has already secured supply for this year and next.

Vehicle sales in the United States rose 73% in the quarter from a year earlier, while European sales more than doubled. In South Korea, sales dropped 11%.

Separately yesterday, Kia Corp, a unit of Hyundai Motor, posted a record operating profit of 1.49 trillion won (RM5.5bil) in the second quarter, compared with a 145.2 billion won (RM533.7mil) profit a year ago, according to a regulatory filing. — Bloomberg

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