SEOUL -- Hyundai Motor Co. reported a smaller-than-expected drop in profit on high-margin domestic sales and said, while demand should pick up soon, the pace of recovery will be slow due to the impact of the coronavirus pandemic.
South Korea's Hyundai, which together with sister company Kia Motors is the world's fifth-largest automaker, said weakness in both mature and developing economies means auto sales may recover to 2019 levels by around 2023.
"Auto demand is expected to pick up from the third quarter, but economic recession impact from COVID-19 and uncertainties around re-proliferation remain," CFO Kim Sang-hyun said. Hyundai said it will not pay interim dividends this year due to the uncertainty and need to secure capital as it unveiled its results for the second quarter on Thursday.
Net profit for the April-June period fell to 227 billion won (US$189 million) from 919 billion won in the same period a year earlier. The drop was likely due in part to foreign currency debt and lackluster China business, analysts said.
The automaker reported an operating profit of 590 billion won (US$493 million), versus an average analyst estimate of 377 billion won compiled by Refinitiv.
Results were buoyed by sales in South Korea, which rose 13 per cent from a year earlier to 200,000 vehicles, led by demand for large cars and utility vehicles such as the G80 sedan and GV80 crossover from premium brand Genesis.
Hyundai's global retail sales fell 33 per cent for the period, which included double-digit percentage sales drops in markets such as the United States, China, Europe and India.
Hyundai-Kia Automotive sales in Canada were up 4.5 per cent to 211,362 units in 2019, but they are down 30 per cent to 72,937 through the first six months of 2020.
South Korea has surpassed China and the United States as the top market for Hyundai, after the country managed the COVID-19 outbreak better than others and extended auto tax cuts.
Investors see this as "Hyundai being one of the few that can pursue R&D while competitors' business environment is very unstable", Shinhan Investment Corp analyst Jung Yong-jin said.