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October 26, 2020

Hyundai reports Q3 net loss after recall/quality provisions

Hyundai Motor has reported a net loss of KRW189bn (US$167m) in the third quarter compared with a net profit of KRW460bn in the same period of last year.

By bcusack

Hyundai Motor has reported a net loss of KRW189bn (US$167m) in the third quarter compared with a net profit of KRW460bn in the same period of last year.

The South Korean automaker pre-warned of the loss last week, saying it would make a KRW2.1trn one-off provision to cover the cost of car recalls and of an overhaul of its quality management processes. The main recall provisions relate to the company's faulty Theta II engine.

Revenues rose by 2.3% year-on-year to KRW27.6trn in the third quarter, helped by an improved product mix with higher sales of SUVs and Genesis-branded models. Global sales volumes fell by 9.6% to 997,842 units in this period.

Overseas sales dropped by 15% year-on-year to 798,791 units in the third quarter, as demand "remained weak in almost all markets around the world". Sales in South Korea rose by almost 22% to 199,051 units, driven by strong demand for newly launched models such as Genesis GV80 SUV, the G80 sedan and the Hyundai Elantra compact sedan.

The company said that apart from the provisions, its business performance exceeded market expectations despite persistently weak global demand caused by the COVID-19 pandemic.

Global sales in the first nine months of 2020 were down by over 19% at 2,605,189 units, generating revenues of KRW 74.75trn and a net profit of KRW 741.2bn. 

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