Hyundai Motor Co (HYMTF) Q3 2024 Earnings Call Highlights: Navigating Challenges with Revenue ...

GuruFocus News
4 min read

In This Article:

  • Global Wholesale Units: Decreased by 3.2% year on year to 1,011,808 units.

  • Retail Sales: Decreased by 3.1% year on year to 988,594 units.

  • Domestic Sales: Increased by 1.8% year on year.

  • North America Sales: Increased by 9.3% year on year.

  • Revenue: Increased by 4.7% year on year to KRW43 trillion.

  • Operating Profit: Decreased by 6.5% year on year to KRW3.6 trillion.

  • Net Profit: Decreased by 3% year on year to KRW3.2 trillion.

  • Cost of Goods Sold: Increased by 0.8 percentage points to 80.2%.

  • SG&A Expenses: Increased by 6.1% year on year to KRW4.9 trillion.

  • Finance Division Revenue: Increased by 10.1% year on year.

  • Operating Profit Margin: Recorded at 8.3%.

  • Dividend: Quarterly dividend of KRW2,000, increased by KRW500 from the previous quarter.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Hyundai Motor Co (HYMTF) reported a 4.7% year-on-year increase in revenue to KRW43 trillion for Q3 2024.

  • North American sales saw a significant increase of 9.3%, driven by strong demand for high-margin vehicles.

  • Hybrid vehicle sales increased by 45.4% year-on-year, with notable growth in the US and Europe.

  • Hyundai Capital's operating profit increased by 13.6% year-on-year, supported by strong asset growth and improved returns.

  • The company maintained a strong operating margin of 8.3% despite challenging market conditions.

Negative Points

  • Global wholesale and retail sales decreased by 3.2% and 3.1% year-on-year, respectively.

  • Operating profit decreased by 6.5% year-on-year to KRW3.6 trillion, impacted by increased incentives and SG&A expenses.

  • EV sales declined by 8.1% due to weakened demand, despite a recovery from the first half of the year.

  • The company faced a one-time warranty cost of KRW319 billion due to a proactive warranty extension for the GRAND SANTA FE in the US.

  • Sales in Europe decreased by 9.5% on a wholesale basis, attributed to weaker demand for EVs.

Q & A Highlights

Q: Can you explain the reasoning behind the one-time provisioning for warranty extensions, and why there hasn't been any recall news? A: The provisioning was a proactive measure for the GRAND SANTA FE models sold in North America, due to high usage of towing by US consumers, which stresses the engine. The warranty was extended from 10 years/100,000 miles to 15 years/150,000 miles. This was not a recall but a preemptive action to maintain customer trust and quality standards.

Q: How does Hyundai handle R&D costs and patents when collaborating with partners like GM and Waymo? A: Hyundai and Kia share R&D functions and costs, but patents developed are held separately. Collaborations with partners like GM and Waymo are managed to ensure that any profits or technologies developed are solely attributed to Hyundai, without interference from Kia.

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