Hyundai Motor's operating profit fell below 3 trillion won ($2.7 billion) last year due to the spread of the COVID-19 and allowance of quality costs. However, sales have exceeded 100 trillion won ($91 billion) following 2019.
Hyundai Motor announced the results of its annual performance last year at a conference call on Jan. 26, saying, "Hyundai Motor's operating profit last year was 2.7 trillion won, down 22.9% year-on-year."
Considering 2.1 trillion won in quality provisions accumulated in relation to 'Theta 2 GDI Engine' in the third quarter of last year, actual profitability has improved significantly.
Its operating profit ratio was 2.7 percent, down 0.7 percentage points from last year's 3.4 percent. Last year's sales fell 1.7 percent year-on-year to 103.97 trillion won.
As a result, Hyundai Motor surpassed 100 trillion won in annual sales for the first time in 2019 and achieved 100 trillion won for the second consecutive year.
Net profit was tallied at 2.1 trillion won, down 33.5 percent year-on-year. Sales of finished cars fell 15.4 percent year-on-year to a total of 3,744,737 units. Domestic demand rose 6.2 percent to 787,854 units, while overseas sales fell 19.7 percent to 2,956,883.
Its performance in the fourth quarter of last year showed a clear rebound. Its fourth-quarter operating profit was 1.64 trillion won, up 40.9% from a year earlier. Operating profit improved significantly as sales of luxury cars such as SUVs, Genesis GV80 and G80 increased.
Its operating profit ratio in fourth quarter was 5.6%, surpassing 5% for the first time since 5.0% in third quarter of 2017.
Its fourth quarter sales were 29.24 trillion won, up 5.1% year-on-year. Sales increased due to the expansion of sales of high value-added new cars despite the strong won, with the won-dollar exchange rate falling from 1,176 won to 1,118 won during the same period.
In the fourth quarter, the cost ratio of sales fell 1.5%p year-on-year to 81.6%, and net profit rose 78.3% year-on-year to 1.37 trillion won.
Hyundai Motor explained, "Although global demand for automobiles is showing a gradual recovery, sales in the fourth quarter continued to decline due to the re-proliferation of Covid-19."
It continued to say, "It is hard to expect a recovery before Covid-19 despite the economic stimulus policy and base effect of each country this year. The environment such as intensifying competition and unfavorable exchange rates will continue."
Hyundai Motor has proposed a total of 4.16 million units as the sales target this year, including 741,500 units in Korea and 3,418,500 units overseas.
To this end, it is planning to invest a total of 8.9 trillion won this year, including 4.5 trillion won in facility investment, 3.5 trillion won in R&D investment, and 900 billion won in strategic investment.
Hyundai Motor explained, "We plan to focus on improving profitability by successfully settling global markets for Genesis and Ioniq brands, expanding SUV sales, promoting optimization of production and profit and loss, and accelerating cost innovation."
Ioniq 5, which is equipped with E-GMP, a platform dedicated to electric vehicles, will be released sequentially in South Korea and the U.S. following its launch in Europe in March. It is also planning to release Genesis G80 electric vehicle eG80 and Genesis subcompact SUV JW within this year to achieve 160,000 electric vehicles this year.
