Hyundai Motor’s and its affiliate Kia Motors’ headquarters in southern Seoul. (image: Hyundai Motor Group)
SEOUL, July 20 (Korea Bizwire) — Hyundai Motor Co. and its affiliate Kia Motors Corp., South Korea’s two biggest carmakers, may suffer a sharp decline in the second-quarter earnings as a result of the coronavirus outbreak, but have fared well compared to foreign rivals, analysts said Monday.
In the three months that ended June 30, Hyundai and Kia’s earnings results are estimated to have plunged as the COVID-19 pandemic affected their vehicle production and overseas sales in major markets, such as the United States and Europe.
Local brokerages expected Hyundai’s net profit for the second quarter to have dipped 82 percent to 176 billion won (US$146 million) from 999.6 billion won in the same period of last year and Kia’s bottom line to sink to 60 billion won from 505.4 billion won over the cited period.
Hyundai’s operating profit is forecast to nosedive to 248 billion won in the just-ended quarter from 1.24 trillion won a year earlier, with sales down 26 percent to 19.84 trillion won from 26.97 trillion won.
Kia’s operating income is projected to fall to 25 billion won from 533.6 billion won during the cited period, with sales down 23 percent to 11.21 trillion won from 14.51 trillion won.
They are scheduled to announce their most recent quarterly earnings on Thursday.
Analysts said robust sales of their new models in the domestic market helped Hyundai and Kia fare better than their global rivals and offset weak overseas sales in the second quarter.
“The carmakers likely have performed better than their bigger rivals, helped by strong local demand for Hyundai’s G80 sedan and GV80 sport-utility vehicle (under its independent Genesis brand) and Kia’s Sorento SUV and K5 sedan,” Kwon Soon-woo, an analyst at SK Securities Co., said.
This photo taken on April 8, 2020, shows vehicles lined up at Hyundai Motor’s port in Ulsan, about 410 kilometers southeast of Seoul. (Yonhap)
For instance, Daimler AG last week announced an operating loss of 1.68 billion euros ($1.9 billion) as the spreading virus led to a slump in demand, dealership closures and lockdowns.
A cut in consumption taxes also helped boost Hyundai and Kia’s local sales in the second quarter, the analyst said.
Looking ahead, Kwon said that the coronavirus impact on vehicle demand in advanced and developing markets is likely to continue into the third quarter if the virus prolongs.
It remains to be seen when their domestic and overseas production facilities will return to full operations.
Hyundai suspended most of its overseas plants from March amid virus fears. All of its overseas plants returned to operations early in May, though not in full production. Production in their domestic plants have yet to get fully back on track.
To revive sales, Hyundai plans to launch the G70 sedan and aims to begin sales of the GV80 SUV in the North American markets later this year. Kia plans to launch the Carnival minivan in the local market later this year.
“The carmakers’ earnings will rebound in the third quarter (compared to a quarter earlier) if the virus slows down and overseas vehicle production and sales in the U.S. market improve in the third quarter,” Kim Dong-ha, an analyst at Hanwha Investment & Securities Co. said.
(Yonhap)
