Seoul: Hyundai Motor Co., South Korea's leading automaker, announced a 22.1 percent decline in its second-quarter net profit, attributed to newly imposed U.S. import tariffs effective since April.
According to Yonhap News Agency, Hyundai's net profit for the quarter ending in June decreased to 3.25 trillion won (approximately US$2.4 billion) from 4.17 trillion won in the same period last year, as disclosed in a regulatory filing. The company indicated that although increased vehicle sales in domestic, U.S., and European markets could have bolstered quarterly results, the U.S. tariffs on imported vehicles negatively impacted the bottom line. Rising incentives and sales-related costs amidst intensifying competition also contributed to the decline.
The U.S. government began enforcing a 25 percent tariff on all imported vehicles on April 2. In response, the South Korean government is negotiating to reduce the tariff rate for South Korean vehicles. Despite the current tariff rates, Hyundai Motor plans to continue facility investments under a potential contingency plan, ensuring core business operations remain unaffected. Executive Vice President Lee Seung-jo, head of the finance division, emphasized during an earnings conference call that the company will also explore expanding overseas vehicle production to adapt to market conditions flexibly.
On the same day, Hyundai Motor's stock fell 2.03 percent to 217,500 won, underperforming the broader Korea Composite Stock Price Index (KOSPI), which saw a gain of 0.21 percent. Looking forward, Hyundai highlighted that tariff-related risks will continue to pose significant uncertainty for its operations in the U.S., its most crucial overseas market.
Operating profit for the quarter fell 15.8 percent to 3.6 trillion won from 4.27 trillion won, while sales increased 7.3 percent year-on-year to 48.28 trillion won from 45.02 trillion won. For the first half of the year, net income dropped 12 percent to 6.63 trillion won from 7.54 trillion won in the previous year. Operating profit declined 7.7 percent to 7.23 trillion won from 7.83 trillion won, while sales rose 8.2 percent to 92.69 trillion won from 85.67 trillion won.