Hyundai and Kia Expected to Report Slower Q1 Operating Profits
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Synopsis
Hyundai Motor and Kia are set to announce their Q1 earnings this week, showing increased sales but decreased operating profits, amid concerns over new tariffs impacting the automotive sector.
Key Takeaways
- Hyundai Motor sales projected at 43.44 trillion won.
- Kia estimated to report 27.81 trillion won in sales.
- Operating profits expected to decline for both automakers.
- New U.S. tariffs may impact profitability significantly.
- Hyundai plans to expand U.S. production capacity.
Seoul, April 23 (NationPress) The prominent industry players Hyundai Motor and Kia are anticipated to showcase improved sales figures, despite facing a decline in operating profits in their upcoming first-quarter earnings reports, as indicated by a recent market analysis released on Wednesday.
The earnings forecast analysis by securities firms, compiled by Yonhap Infomax over the last three months, suggests that Hyundai Motor could report sales amounting to 43.44 trillion won (US$30.4 billion) for the January-March timeframe, along with an operating profit of 3.54 trillion won when the report is unveiled on Thursday.
Sales are projected to show a 6.8 percent increase, while operating profits are expected to experience a slight decline of 0.4 percent, as reported by Yonhap news agency.
Meanwhile, Kia is forecasted to achieve 27.81 trillion won in sales and an operating profit of 3.23 trillion won, marking a 6.1 percent increase year-on-year but a 5.8 percent decrease in profits, with results due on Friday.
These projections come in light of rising concerns regarding the new 25 percent tariffs imposed by the Donald Trump administration on all auto and auto parts imports since April 3.
The two leading automakers in South Korea are reportedly managing the impact with their current vehicle inventories; however, market analysts caution that profitability may face escalating pressure in the upcoming months.
KB Securities has warned that the U.S. tariffs could potentially reduce Hyundai’s annual operating profit by 3.4 trillion won and Kia’s by 2.3 trillion won.
In response to the tariff-related challenges, Hyundai Motor Group aims to increase its U.S. production capacity to 1.2 million units annually by enhancing output at its Alabama and Georgia facilities, including the new Hyundai Motor Group Metaplant America electric vehicle (EV) plant situated in Georgia.
Additionally, the company has opted to freeze the prices of all new vehicles sold in the U.S. until early June, an initiative designed to alleviate consumer worries regarding rising costs.
