Hyundai Motor Co. said on Tuesday it will spend a record 9.2 trillion won ($7.7 billion) this year to ramp up facilities for electric cars and other eco-friendly vehicles after the company posted all-time high revenue last year.
The top South Korean automaker also forecast the global automotive chip shortage, which plagued carmakers throughout last year, will gradually ease from the second quarter, which likely will lead to increased car sales for the company in 2022.
Its revenue reached a record 117.6 trillion won in 2021, up 13.1% from 104 trillion won in the previous year, according to Hyundai’s regulatory filing on Jan. 25.
Operating profit nearly tripled to 6.68 trillion won from 2.39 trillion won, driven by robust sales of its luxury Genesis models and high-end sport utility vehicles.
Hyundai attributed its decent annual results to an improved product mix, although overall business conditions worsened due to unfavorable foreign exchange rates and the persistent COVID-19 pandemic.
“Increased sales of our popular SUVs and the premium Genesis models meant enhanced profitability for us,” said a Hyundai official.
The company sold 3.89 million vehicles globally in 2021, up 3.7% from a year earlier. By region, its sales in Latin America increased 40.4%, followed by 19.2% in India and 19.1% in Europe. In the North American market, the world’s second-largest auto market, Hyundai’s sales rose 1.6% last year.
SUVs accounted for 47.3% of its total global sales in 2021, up 4.1 percentage points from the previous year. Luxury cars under its standalone Genesis brand accounted for 5.1% of its total shipment, up from 3.4% in 2020.
Hyundai's SEVEN, its large-size SUV IONIQ7 concept WEAK Q4 RESULTS
Hyundai Motor reported a weaker-than-expected fourth-quarter net profit, weighed by the extended chip shortage and rising raw material costs.
Net profit for the October-December quarter of 2021 reached 701.4 billion won, down 41% from 1.18 trillion won in the year-earlier period.
The company sold a total of 960,639 units in the last quarter, down 15.7% from a year earlier. Sales in overseas markets fell 17.2% to 774,643 units, while domestic sales gained 8.9% to 185,996 units.
Operating profit, however, rose 22% to 1.53 trillion won on improved dollar-won exchange rates. Fourth-quarter revenue rose 6.1% to 31.27 trillion won.
“Robust sales of SUV and Genesis luxury models and the growing popularity of electric vehicles helped lift revenue in the fourth quarter despite the slowdown in sales volume amid an adverse economic environment,” Hyundai said in a statement.
Shares of Hyundai Motor fell 1.3% to close Tuesday at 194,500 won. The broader benchmark Kospi index finished 2.6% lower.
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Hyundai Motor said it expects difficult business conditions, including the quick spread of the Omicron COVID-19 variant, to continue throughout this year, although it expects global auto chip shortages to ease going forward.
The Genesis Electrificed GV70 The negative impact of the chip shortage, albeit improving since December of 2021, is expected to continue through the first quarter and gradually stabilize from the second quarter, it said.
“The global auto parts supply chain will be normalized in the first half. We expect auto sales by automakers to return to the pre-pandemic level by year-end,” Chief Financial Officer Seo Gang-hyun said during a conference call with analysts.
In a bid to build investor confidence, the top Korean automaker unveiled ambitious annual guidance that projects a revenue increase of 13%-14% and an operating profit margin of 5.5%-6.5% for 2022.
Hyundai Motor said it aims to sell over 4.3 million cars globally this year, up 10.5% from last year.
The company said it will strengthen its EV lineup by launching the Genesis GV60, Electrified GV70, and IONIQ 6 this year in line with increasing consumer preferences for eco-friendly models.
Hyundai targets to sell 220,000 EVs this year, up 56.3% from 2021, bringing its total 2022 eco-friendly car sales to 560,000 units, a 33.8% on-year increase.
To achieve its goal, the automaker plans to invest 9.2 trillion won, including 5 trillion won in facility expansion and 3.6 trillion won in R&D spending, this year.
“We will continue to make efforts to secure our growth momentum, although there will be several uncertainties in the global auto market,” said a company executive.
Hyundai increased its 2021 year-end dividend to 4,000 won per common share, up from the previous year’s 3,000 won, reflecting its results improvement.
Write to Byung-Uk Do at dodo@hankyung.com In-Soo Nam edited this article.
