(Seoul = Yonhap News) Reporter Hong Gyu-bin = It is predicted that Hyundai Motor Company's third quarter operating profit and sales, which are experiencing sluggish sales this year, will both decline.
Operating profit, a representative indicator of profitability, is in a position to be overtaken by its younger sibling, Kia, and sales, a measure of external growth, are expected to take a step backwards for the first time in six years.
As a result of analyzing securities reports for the past month through the Yonhap Infomax system on the 11th, Hyundai Motor Company's operating profit in the third quarter of this year was expected to be 2.3635 trillion won and sales to be 44.8014 trillion won, down 6.8% and 4.1%, respectively, from the same period last year.
The operating profit forecast of 2.3635 trillion won is 26.5 billion won smaller than that of Kia (2.39 trillion won), an affiliate of the same group.
Over the past 10 years since 2016, Hyundai's operating profit was lower than Kia's only three times: in the third and fourth quarters of 2020 and the fourth quarter of 2025. According to the observatory, this will be the fourth time.
The biggest cause of Hyundai Motor Company's poor performance is a decline in sales. Due to production disruptions due to the union strike and aging of existing models, sales in the third quarter amounted to 918,000 units, down 11.5% from the same period last year.
Although the U.S. export tariff rate was lowered by 10% from 25% to 15% in the third quarter of last year, the burden of sluggish sales and rising raw material prices seems to have outweighed the effect of the tariff reduction.
The decline in the exchange rate effect, which supported performance in the first half of the year, is also expected to exert downward pressure on operating profit. The industry analyzed that the average won-dollar exchange rate fell from 1,502 won in the second quarter to 1,418 won in the third quarter, resulting in a decrease in operating profit of about 400 billion won.
Sales also could not avoid the impact of sales decline.
This is the first time in six years that Hyundai Motor Company's quarterly sales have decreased compared to the previous year since the second quarter of 2020 (KRW 21.859 trillion, ↓ 18.9%), when the impact of COVID-19 was significant. Based on the previous third quarter, it has been 10 years since the third quarter of 2016 (KRW 22.0837 trillion, 5.7% ↓).
As a result, Hyundai Motor Company will stop its sales growth that has continued for 24 consecutive quarters since the third quarter of 2020. In the previous quarter, the second quarter, it recorded its highest quarterly sales ever at KRW 49.2153 trillion.
Korea Investment & Securities pointed out, "There were unusual factors such as engine valve supply disruption and strikes due to the fire at the Daejeon plant of Safety Industries, but even excluding the strike, structural factors of decline that have continued since the first half of the year, such as aging of existing models and unsecured mass electric vehicle lineup, are in place."
On the other hand, Kia's performance is expected to improve significantly thanks to strong global sales. Operating profit in the third quarter was expected to surge 63.4% to 2.39 trillion won and sales to increase 11.7% to 32.446 trillion won.
This is thanks to Kia selling 846,764 units in the global market in the third quarter, a 7.8% increase from last year's third quarter (785,137 units), recording its highest performance in the third quarter ever.
According to Hanwha Investment & Securities, Kia showed even growth in major markets such as the United States (244,702 units, 8.5% ↑), Europe (145,834 units, 17.6% ↑), and India (89,242 units, 38.5% ↑). Total eco-friendly vehicle sales increased by 45.9%, reaching close to 300,000 units.
Regarding next year's performance, Hanwha Investment & Securities also predicted, "We expect to offset the negative exchange rate impact by increasing the volume of new vehicles confirmed this year," and added, "The contribution to profit growth will increase, centering on North American hybrid vehicles (HEV) and European electric vehicles (BEV)."
