Hyundai Motor forecasts robust EV growth after quarterly profit jump

SEOUL (Jan 26): Hyundai Motor Co said on Thursday that it expects to have solid backorder demand in major car markets and forecast robust growth in electric vehicle sales, including in the United States where regulatory concerns have clouded its outlook.

The South Korean maker of the Ioniq 5 model is targeting an ambitious 54% jump in EV sales in 2023 to 330,000 globally, and said it wants its US electric car sales to climb 150% to 73,000, to account for 9% of its US vehicle sales.

The plans were outlined at its fourth-quarter earnings briefing where the automaker reported a tripling of net profit, albeit one that fell short of expectations. It also said it was cancelling treasury shares equivalent to 1% of its outstanding stock.

“Strong earnings in the fourth quarter continued, thanks to increased sales volume and solid sales of high-margin vehicles, as well as favourable exchange rates,” said Seo Gang Hyun, an executive vice president.

Like many other automakers, Hyundai benefited from the tight supply of new vehicles last year, which kept retail prices high.

Seo also noted that its results benefited from an improved global plant utilisation rate excluding China, which rose 7.6 percentage points to 96.8% from the previous quarter.

Net profit for October-December tripled to 1.7 trillion won (US$1.4 billion) on a 24% climb in revenue. The profit growth looked particularly strong as Hyundai booked one-off costs in the same period a year earlier.

That, however, fell short of a Refinitiv SmartEstimate of 2.5 trillion won drawn from 18 analysts, partly due to a wider non-recurring loss that the automaker did not elaborate on.

Both Hyundai and affiliate Kia Corp have been dogged by concerns that they will be hurt by President Joe Biden’s Inflation Reduction Act that excludes Korean automakers from federal tax credits because they don’t yet make EVs in North America.

However, Jose Fernandez, the under secretary of state for economic growth, energy and the environment, told an event at a Washington-based think tank this week that Washington is looking “for ways to try and ameliorate some of what (Koreans) believe are unfair consequences”.

Those remarks, reported by South Korean media on Wednesday and Thursday, as well as Hyundai’s upbeat targets, helped shares in Hyundai end the day 5.6% higher, while those in Kia surged 6.6%.

Hyundai is targeting revenue growth of 10.5%-11.5% this year. It expects a 9.6% jump in North American vehicle sales and a 20.5% surge in China vehicle sales.

It also flagged potential improvement in its operating profit margin, predicting a margin of between 6.5% and 7.5% compared with 6.9% last year.

Hyundai’s plans come on the heels of a positive outlook provided hours earlier by Tesla Inc, which said its aggressive price cuts have ignited a wave of demand for its vehicles.