November 24, 2024

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The headquarters of Hyundai Motor Company (left) and Kia in Seoul (Hyundai Motor Group)

Hyundai Motor Company and its sister firm Kia will continue to post upbeat earnings in the second quarter as the two automakers are projected to take first and second places on the list of Korea’s top profit makers in the second quarter.

According to market tracker FnGuide’s earnings consensus on Monday, Hyundai Motor’s operating profit in the second quarter is expected to reach 3.6 trillion won ($2.7 billion), up 21.1 percent on year to repeat as the leading earner among the listed companies in the country. Hyundai Motor’s quarterly revenue is forecast to hit 39.9 trillion won, up 10.9 percent on year. Such figures would be the largest quarterly numbers in the history of the automaker.

Hyundai Motor outpaced Samsung Electronics to take the top spot as the highest earner in the first quarter of this year for the first time since the country adopted the International Financial Reporting Standards in 2009.

Kia is predicted to log 2.98 trillion won in operating profit in the second quarter, up 33.4 percent on year. The quarterly revenue is estimated at 25.5 trillion won, up 16.7 percent on-year. If Kia’s record-breaking numbers turn out as projected, the automaker will likely follow Hyundai Motor as the second-highest earner in the country in the second quarter with semiconductor giants -- Samsung Electronics and SK hynix -- ailing due to worsening chip market conditions.

Hyundai Motor and Kia together sold about 1.78 million vehicles across the globe in the first quarter, raking in a combined operating profit of 5.8 trillion won. With the second quarter’s combined operating profit forecast to exceed 6.5 trillion won, the two auto giants’ annual earnings could surpass 20 trillion won for the first time this year.

The automakers announced Monday that Hyundai Motor had sold over 2.08 million vehicles in the first half of this year, while Kia logged a record of over 1.57 million sold in the same period. Hyundai Motor and Kia saw on-year increases of 10.8 percent and 11 percent, respectively.

Sport utility vehicles accounted for about half of the total sales. Selling more SUVs -- high-value products that lead to greater profits for carmakers -- is expected to give a boost to the company's earnings. Having played a positive role for Korean automakers in the first quarter, a strong dollar will likely help the companies' second-quarter figures again.

Experts predicted that Hyundai Motor and Kia will maintain their upward momentum in the future as the automakers speed up the automation process by expanding their electric vehicle portfolios.

“In order to truly secure the EV market, the core growth engines are expanding investment, securing their EVs' marketability and reducing production costs. (Hyundai Motor Company’s investment plan) clearly shows a drive to strengthen automation,” said Jung Yong-jin, an analyst at Shinhan Securities. Jung was referring to Hyundai Motor Company’s recently announced plan to put aside 35.8 trillion won for automation out of a 10-year investment of 109.4 trillion won.

“If (Hyundai Motor Company) can keep its competitiveness in the EV market, it can create a virtuous cycle that leads to both business growth and profitability,” he added. “Whether the company can achieve its EV goals (in the long term) is becoming more important than the volatility of stock prices in the short term.”

Cho Soo-hong, an analyst at NH Investment & Securities, said the launch of the Kia EV9, the carmaker’s all-electric large SUV, will likely accelerate the company’s automation momentum.

By Kan Hyeong-woo (hwkan@heraldcorp.com)