Hyundai Motor very likely to continue profit leadership in Q2

Hyundai Motor Co. headquarters in Seoul [Photo by Park Hyung-ki]

In an exciting development, Hyundai Motor Co. is expected to secure its position as the highest-earning company in South Korea for the second consecutive quarter this year. However, starting from the third quarter, industry titan Samsung Electronics Co. is projected to reclaim its throne as the reigning champion along with the recovery of the semiconductor industry, while automotive sales are predicted to face challenges.

According to market tracker FnGuide on Thursday, Hyundai Motor is set to emerge as the top company in terms of operating profit among 152 listed companies in the country, as estimated by three or more securities firms. Analysts have predicted that Hyundai Motor will record an operating profit of 3.6 trillion won ($2.7 billion), representing a remarkable 21 percent rise from a year earlier.

In contrast, Samsung Electronics is expected to see a significant decline in its second-quarter operating profit. Estimates suggest a staggering 98 percent drop on year to 266.5 billion won. This level is even more than halved from the 640.2 billion won recorded in the first quarter of this year.

During the first quarter, Hyundai Motor secured its position as the top company in terms of quarterly operating profit, with 3.59 trillion won, marking the first time that Hyundai Motor beat Samsung Electronics since the adoption of the International Financial Reporting Standards (IFRS) in 2009.

However, experts predict that Samsung Electronics will regain its profitability starting from the third quarter. Securities firms forecast an operating profit of 3.71 trillion won for Samsung Electronics in the third quarter, while Hyundai Motor is expected to reach 2.82 trillion won and its affiliate Kia Corp. to achieve 2.43 trillion won.

Market analysts explain that as the second half of the year progresses, Samsung Electronics will benefit from cost-cutting effects, leading to improved financial performance.

“From the second half of the year, the semiconductor industry is expected to show excess profitability compared to the market, thanks to increased demand, easing price declines, and inventory reduction,” said Kim Dong-won, an analyst at KB Securities Co.

Conversely, analysts anticipate a more fluctuating trend for Hyundai Motor. During its first-quarter conference call, Hyundai Motor acknowledged the continuation of solid performance until the second quarter but highlighted uncertainties in the latter half due to the possibility of an economic slowdown in the U.S.