South Korea’s Hyundai Motor raised its full-year revenue and profit margin guidance on Monday, betting on strong sales of luxury models and sport utility vehicles and a plunge in the local currency after a lacklustre third quarter.
But in a mixed outlook, the company slashed its 2022 vehicle sales forecast by 7 percent to 4.01 million, as the auto industry struggles with supply chain disruptions involving chips and other components. Hyundai sold 3.89 million vehicles in 2021.
Shares in Hyundai fell 3 percent as of 0537 GMT, after it reported a 3 percent drop in third-quarter net profit along with its revised outlook, underperforming a 0.8 percent rise in Seoul’s benchmark index .
“While Hyundai Motor expects a gradual recovery from global chip and component shortages in the fourth quarter, the company anticipates external uncertainties to continue, including inflation, supply chain disruption and fluctuation in raw material prices due to geopolitical issues,” it cautioned in a statement.
Despite that upheaval, the company raised its full-year revenue growth forecast range by six percentage points to 19-20 percent from its previous estimate in January. Operating profit margin is now estimated at between 6.5-7.5 percent, up from 5.5-6.5 percent previously.
Hyundai, which together with affiliate Kia is among the world’s top five automakers by sales, said third-quarter operating profit fell by 3 percent due to a 1.36 trillion won ($906 million) provision to pay for costs related to engine quality issues.
The provision, announced last week, amounted to more than half of the estimated third-quarter net profit of 2.4 trillion won drawn from 17 analysts.
Revenue for the quarter jumped 31 percent to 37.7 trillion won, below the 36 trillion won analysts had expected.
Revenue was helped by a weaker won, which increased repatriated overseas sales.
The won, one of the worst-performing currencies in Asia, has tumbled more than 17 percent so far this year against the dollar.
The outlook for auto demand is weakening due to soaring inflation and interest rates around the world. Tesla Inc Chief Executive Elon Musk warned last week that “a recession of sorts” in China and Europe was weighing on demand for its electric cars.
But overall vehicle supply remains tight globally due to the chip shortage and COVID-related restrictions.
Toyota Motor Corp, the world’s biggest automaker by sales, also warned on Friday its annual vehicle production was likely to come in below its initial target, due to the persistent chip shortage.
Hyundai said sales of its electric vehicles surged more than 27 percent to around 52,000 in the third quarter – accounting for 5.1 percent of its total sales volume – driven by strong sales of newly launched IONIQ 6 and GV60 models.