SEOUL, Oct 24 (Reuters) – Hyundai Motor Co (005380.KS) raised its profit forecast on Monday, buoyed by sales of premium vehicles and a rising exchange rate, but disappointing quarterly results and an uncertain outlook electric vehicle (EV) sales in the United States sent its shares down 3%.
South Korean company Hyundai and its subsidiary Kia Motors (000270.KS), which makes the popular Ioniq 5 and EV6 electric cars, had recorded a strong performance of electric vehicles in the United States until July, doubling sales of the last year and overtaking Ford Motor Co (FN ), Volkswagen AG (VOWG_p.DE) and General Motors Co (GM.N).
But the momentum has since stalled. Sales of the Ioniq 5 crossover SUV in the United States fell about 14% in September from the previous month, hit by a new US law that ended federal tax credits for the purchase of vehicles manufactured by certain foreign automakers, including Hyundai.
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Hyundai said it was considering various options to minimize the impact of the legislation, including forming a joint venture to source key battery parts to qualify for new U.S. electric vehicle tax credits. up to $7,500.
Analysts said Hyundai’s response to the question remained vague.
“The impact of the Inflation Reduction Act on Hyundai’s EV sales in the U.S. market seems inevitable, as EV incentives are the key factor for U.S. EV buyers,” said said Lee Jae-il, analyst at Eugene Investment & Securities.
In a mixed outlook, Hyundai on Monday raised its full-year revenue growth forecast range by six percentage points to 19-20% from its previous estimate in January. The operating profit margin is now estimated between 6.5 and 7.5%, compared to 5.5 and 6.5% previously.
But the company cut its 2022 vehicle sales forecast by 7% to 4.01 million as the auto industry grapples with supply chain disruptions involving chips and other components. Hyundai sold 3.89 million vehicles in 2021.
Shares of Hyundai closed 3.3% lower after reporting a 3% drop in third-quarter net profit and revised outlook, underperforming a 1% rise in the Seoul benchmark. .
“While Hyundai Motor expects a gradual recovery from global chip and component shortages in the fourth quarter, the company expects external uncertainties to continue, including inflation, supply chain disruption and fluctuating commodity prices due to geopolitical issues,” the automaker warned in a statement. statement.
Hyundai said third-quarter operating profit fell 3% due to a 1.36 trillion won ($906 million) provision to pay for costs related to engine quality issues.
The provision, announced last week, amounted to more than half of the estimated third-quarter net profit of 2.4 trillion won drawn by 17 analysts.
Revenue in the quarter jumped 31% to 37.7 trillion won, above the 36 trillion won analysts expected.
Revenues were helped by a weaker won, which boosted repatriated overseas sales. The won, one of Asia’s worst-performing currencies, has fallen more than 17% year-to-date against the dollar.
The outlook for automotive demand is weakening due to soaring inflation and interest rates around the world. Tesla Inc (TSLA.O) chief executive Elon Musk warned last week that “some kind of recession” in China and Europe was weighing on demand for its electric cars.
But overall vehicle supply remains tight globally due to chip shortages and COVID-related restrictions.
Toyota Motor Corp (7203.T), the world’s biggest automaker by sales, also warned on Friday that its annual vehicle output is likely to fall short of its original target, due to ongoing chip shortages.
“While these (supply chain) issues have started to ease, negative consumer sentiment seems to be on the rise as people start to deal with inflation,” said analyst Eugene Lee. .
However, he added that it would likely take months for weaker sentiment to have a significant impact on sales as supplies remained tight amid pent-up demand following the COVID-19 pandemic.
Hyundai said sales of its electric vehicles jumped more than 27% to around 52,000 in the third quarter – representing 5.1% of its total sales volume – thanks to strong sales of the new IONIQ 6 and GV60 models.
($1 = 1,434.4400 won)
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Reporting by Heekyong Yang and Joyce Lee; Editing by Miyoung Kim and Kenneth Maxwell
Our standards: The Thomson Reuters Trust Principles.
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