Hyundai records the best quarter in terms of operating profit since 2017

on Jan 25, 2020
Updated: Mar 11, 2020
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  • Hyundai records the best quarter in terms of operating profit since 2017.
  • Hyundai's operating profit records at 1.24 trillion won versus analysts' estimate of 1.06 trillion won.
  • SUVs contributed to 42% of Hyundai's total sales in the recent quarter.
  • Hyundai says sales recovery in the U.S was remarkable but China continues to weigh it down.
  • Hyundai was reported trading 8.6% higher in the stock market following the earnings report.

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South
Korean multinational auto manufacturer, Hyundai Motor Co, announced its
quarterly results earlier this week. Thanks to a sharp increase in the sales of
SUVs like Kona and Palisade, the company branded the recent quarter as its best
since 2017 in terms of operating profit. For 2020, the company added, it now
expected the profit margins to widen further. The recent quarter recorded 1.24
trillion won for Hyundai’s operating profit that beat analysts’ estimate of
1.06 trillion won.

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SUVs
Contributed to 42% Of Hyundai’s Total Quarterly Sales

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Hyundai
is widely known for an auto manufacturer that focuses primarily on sedans. Executive
vice chairman, Euisun Chung, however, has recently shifted the company’s focus
on sports utility vehicles (SUVs); a strategy that widely
worked for Hyundai
as per the earnings report. While the overall sales including
those of sedans failed to print a sharp increase in the recent quarter, SUVs
were reported to have accounted for around 42% of the total quarterly sales as
compared to a much lower 37% in the same quarter last year.

The
company also highlighted the operating profit margin to have remained capped at
3.5% in 2019. The target for this year, as per Hyundai, is 5%; a target that
the automaker is confident of hitting in 2020. Hyundai also expressed its plans
of revamping a few of its
best-selling models
including Tucson SUV and Elantra Sedan. Launching newer
SUVs contributing to higher sales in this segment, the company stated, is
likely to push it closer to hitting its annual operating profit margin target
in 2020.

Hyundai
along with one of its most prominent affiliates, Kia Motors, reported sales to
have hit the worst level in the pass seven years in 2019. Amidst the falling
demand in China, Hyundai had missed its target for five times in a row. Hyundai’s
forecast for 2020, however, signals optimism.

Hyundai
Expects SUVs To Account For 43% Of The Total Sales In 2019

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With
help from its Genesis brand SUV and the recently launched GV80 SUV, the company
expects its sports utility vehicles to contribute to 43% of the overall sales this
year.

According
to Hyundai, recovery in sales in the United States was good news for the
automaker. Sales in China, however, continue to remain under pressure with a
drop of 4.8% in the past year. In 2020, the company anticipated wholesales
vehicle sales to hit 730,000 mark in China. Sales in China were capped at
650,000 in 2019.

Hyundai
also expressed its plans of launching the premium Genesis brand in Europe as
well as in China. Following the earnings report, Hyundai closed the day trading
8.6% higher in the stock market.

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