Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 6.6% year-on-year to KRW45 trillion.
- Net profit increased by 24.7% year-on-year to KRW4.2 trillion.
- Strong sales in the US market contributed to the overall performance.
- Improvement in product mix, particularly with SUVs and hybrids, boosted profitability.
- Operating profit margin maintained at a high level of 9.5%.
Negative Points
- Operating profit in the automotive division decreased by 1.6% year-on-year due to increased SG&A expenses.
- Eco-friendly vehicle sales saw a 25% decrease in EV sales due to weaker demand.
- SG&A expenses increased by 17.2% year-on-year to KRW5.5 trillion.
- Sales volume in China decreased by 0.2% year-on-year.
- High interest rates and inflation posed challenges for the finance business.
Q & A Highlights
Q: What is the appropriate level of incentives for the US market, and what is your target for the US market share this year?
A: Currently, the incentive level is USD3,100, which is about 50% higher year-on-year and 4% higher compared to the previous quarter. This is in line with the market average of USD3,157. We expect the incentive level to remain within our business plan range for the second half of the year.
Q: How will the potential political changes in the US, such as the presidential election, affect your EV production plans and market strategy?
A: We are closely monitoring the political situation. If Trump wins, there may be universal tariffs and changes to the IRA. We are prepared to adjust our production mix flexibly, potentially increasing hybrid models. More details will be shared during our CEO Investor Day.
Q: Can you provide a timeline for the IPO of Hyundai Motor India and the rationale behind it?
A: We aim to list Hyundai Motor India within the year, pending regulatory review. The Indian securities market is the fourth largest globally, and our Indian subsidiary has strong volume and P&L. Listing will help us solidify our market position.
Q: How did the CDK hacking crisis in June affect your retail sales, and has there been a recovery?
A: Yes, the CDK hacking crisis impacted our June sales. To mitigate this, we moved our usual August summer event to July, which helped recover the losses.
Q: What accounted for the KRW750 billion increase in operating profit under "others"?
A: The increase was due to sales provisions, favorable FX rates, and adjustments in interest rates. There were no extraordinary items affecting this increase.
Q: Do you have any updates on the US lawsuit involving the dealership group?
A: We are currently looking into the issue and will update the market if there are any results.
Q: What is the net cash position for the automotive division as of Q2?
A: The net cash position for the automotive division as of Q2 is KRW15.2 trillion.
Q: What is the outlook for material costs in Q3 and Q4?
A: We expect material costs to continue decreasing, although not as rapidly as in H1. The FX rate is expected to remain strong, so the cost of goods sold ratio should remain stable.
Q: How will the financial business perform in Q4 given the strong revenue despite not-so-strong sales trends?
A: The financial business benefits from mid to long-term revenue accumulation and higher interest rates. We expect continued growth due to these factors.
Q: When will details regarding shareholder returns be announced?
A: Details on shareholder returns will be covered during our CEO Investor Day in late August, including both short-term and long-term policies.
Q: What is the profitability of hybrid vehicles compared to EVs and other segments?
A: Hybrid vehicles have double-digit profitability, higher than EVs, which maintain a low single-digit profitability. More details will be shared during our CEO Investor Day.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
