AutoBeta(AutoBeta.net)04/24 Report--

On the evening of April 23, Hyundai Motor released its first quarter 2020 earnings report. According to the financial report, Hyundai achieved sales of 25.32 trillion won (about 145.1 billion yuan) in the first quarter of 2020, up 5.6% year-on-year; operating profit was 863.8 billion won (about 5 billion yuan), down 4.7% year-on-year; net profit was 552.7 billion won (about 3.527 billion yuan), down 42.1% year-on-year. It is understood that net profit hit its lowest level in a decade, mainly due to the impact of the epidemic on car demand in the Chinese market and losses in the company's financial business.

The decline in sales is the main reason for Hyundai's sharp net profit loss. The company sold 903371 vehicles worldwide in the first quarter, down 11.6% year-on-year and its lowest sales in 34 quarters. Sales in South Korea fell 13.5% year-on-year to 159061 units, while sales in overseas markets including China, India and Europe fell 11% to 744310 units, including 51.7% in China, 19.4% in South America, 16.3% in Europe, 17.2% in North America and 4.7% in Russia.

Hyundai has been underperforming in recent years. According to official figures, Hyundai Motor Group sold 7.19 million vehicles worldwide in 2019, down 3 per cent year-on-year. Hyundai sold 4.42 million vehicles and Kia sold 2.77 million vehicles, below the annual sales target of 7.6 million vehicles and failing to meet the annual sales target for five consecutive years. Hyundai Motor Group expects total sales in 2020 to increase by 350,000 vehicles compared with 2019, up 5% year-on-year to 7.54 million vehicles.

There are many uncertainties about the future development of the company under the epidemic situation, which leads to the variable performance of Hyundai Motor in 2020. Hyundai, like many automakers, suffered inevitable losses in the first quarter of this year, and even in the second quarter Hyundai's performance was difficult to be optimistic about due to the epidemic. In response, Hyundai Motor Group will collectively cut salaries for about 1200 executives at 50 subsidiaries, including Hyundai Motor, by about 20% from this month, with Hyundai Chairman Zheng Yixuan leading the cut.

South Korea added 6 confirmed cases of new crown pneumonia compared with the previous day, with a total of 10708 confirmed cases, according to data from South Korea's central epidemic prevention headquarters Thursday. The number of new cases in a single day has reached a new low since the outbreak in February. South Korea's epidemic has improved, but Hyundai is still unlikely to recover in a short time, prompting the South Korean automaker to cut management salaries, a round of pay cuts for Hyundai executives that will help the company cope with the worsening business prospects of the epidemic.

Since late March, Hyundai has shut down production lines worldwide except for China and South Korea, and sales channels have been nearly paralyzed. Samsung Securities analyst Lynn Ying said that in the first three months of the outbreak, production cuts and blockades only affected South Korea and China's auto markets, but then spread to the entire world market, almost all global automakers will inevitably suffer losses in the second quarter, Hyundai's operating loss in the second quarter may reach 49 billion won.

Hyundai Motor said the global market faced unprecedented uncertainty under the epidemic, with sales falling sharply from a year earlier as demand shrank and factories shut down. Despite the uncertain market environment, the company continues to accelerate its transformation to a smart mobility solutions provider and ensure its dominance in the future of mobility.

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