According to reports from Reuters, Hyundai Motor reported a 21% fall in second-quarter operating profit, missing analysts' estimates as the company faced significant operational challenges. The South Korean automaker posted operating profit of ₹2.85 trillion ($1.9 billion) for the April-June period, which fell short of the ₹3.1 trillion forecast by LSEG SmartEstimate. The company's operating profit declined from ₹3.6 trillion in the same quarter last year, highlighting the deteriorating performance. Despite the profit decline, the company managed to achieve revenue growth of 2% year-on-year to ₹49.2 trillion, marking the highest-ever quarterly revenue in the second quarter of this year. As reported by Reuters, the company kept its annual guidance unchanged, indicating confidence in growth recovery in the third and fourth quarters.
As reported by Reuters, Hyundai's global retail sales fell 4.2% in the quarter, including declines in Europe and China, while sales rose in India and North America. The weak performance underscores the challenges facing the automaker in an increasingly uncertain business environment. US policy uncertainty and intensifying competition from Chinese rivals have particularly hurt demand, with tariffs remaining a major headwind. The company's domestic market also faced challenges, with domestic demand weakening and wage talks with unionized workers remaining deadlocked, causing millions of dollars in losses for each hour of stoppage during partial strikes. According to Reuters, the company forecasts that economic uncertainty will persist and competition in the industry will be tougher going forward.
As reported by Yonhap News, Hyundai faced significant production disruptions during the quarter due to production constraints from a March supplier fire, which caused domestic sales to drop 16.4% to 157,647 units. Foreign vehicle sales also fell 4.9% amid an unfavorable management environment triggered by shrinking demand. The automaker, which together with affiliate Kia Corp is the world's third-biggest automaking group by sales, forecasts that economic uncertainty will persist and competition in the industry will be tougher going forward. The weak performance underscores wider challenges facing the auto industry, as carmakers contend with rising energy and raw material costs as well as supply chain disruptions linked to U.S. tariffs and conflict in the Middle East. According to Reuters, higher prices for key raw materials, including plastics, driven by the conflict in the Middle East and inflation, increased second-quarter costs by about ₹32,000 crore ($400 billion).
According to Yonhap News, Hyundai achieved significant milestones in its electric vehicle portfolio during the quarter. Hybrid car sales set a record high of 187,661 units, while all-electric vehicle sales reached around 70,000 units. In the U.S., the company's largest market by revenue, electric vehicles' share of sales fell to 4.0% from 10.2% following the end of federal EV subsidies last year, despite increased incentives to combat higher energy prices and persistent inflation. The company also increased incentives in Europe as consumers grappled with these economic pressures during the quarter. As reported by Reuters, the company expanded incentives in the U.S. to counter the abolition of electric vehicle subsidies and raised spending in Europe as well due to increasingly aggressive competition from Chinese carmakers.
According to Reuters, Hyundai shares were trading up 2% following the earnings announcement, compared with benchmark KOSPI's 4.4% rise. The positive market reaction suggests investor confidence in the company's strategic pivot toward AI and robotics technologies, even as traditional automotive challenges persist in key markets like South Korea and the U.S. The resilient share price performance reflects market optimism about the company's long-term AI and robotics strategy, despite near-term operational headwinds and concerns about achieving full-year margin targets. The stock has gained more than 40% this year primarily on optimism around the company's robotics business following the unveiling of its latest Atlas humanoid model, as reported by Moneycontrol.
