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

Michael Harris
  • January 25th, 18:09
  • Last Updated: January 25th, 18:10
  • 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.

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.

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

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

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.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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