Hyundai Glovis' operating profit decreases to $323M

Hyundai Glovis' operating profit decreased by 8 percent on-year to 412.6 billion won ($323.1 million) for the second quarter due to falling ocean freight rates.

[HYUNDAI GLOVIS]

Hyundai Glovis' operating profit decreased by 8 percent on-year to 412.6 billion won ($323.1 million) for the second quarter due to falling ocean freight rates.

The figure fell below market expectations of 416.7 billion won compiled by market tracker FnGuide.

Revenues fell 4.8 percent to 6.53 trillion won, below the market consensus of 6.7 trillion won.

Net profit was down 4.7 percent to 290.7 billion won compared to the same period last year, falling short of analyst expectations of 300.8 billion won.

"These financial results are believed to have been impacted by various external factors that are uncertain, including currency, interest rate and the market conditions in the global logistics sector," the company, which is Hyundai Motor's logistics unit, said on Friday.

By business segment, the logistics division saw positive sales in both domestic and international inland transportation for finished cars. However, revenue from forwarding services, encompassing container and air transport, declined due to lower freight rates. As a result, the overall revenue for logistics decreased by 4.8 percent year-on-year, totaling 2.3 trillion won, while its operating profit saw a 31.2 percent year-on-year increase to 213.2 billion won.

The shipping business saw a decline in revenue by 5.5 percent to 1.1 trillion won and operating profit by 20.7 percent to 74 billion won compared to the previous year. Overall revenue for the shipping business encountered challenges due to the reduced bulk carrier sales from short-term market downturns.

The distribution sector reported a 4.6 percent year-on-year decrease in revenue, amounting to 3.2 trillion won, and a 35 percent decrease in operating profit, totaling 125.3 billion won. Hyundai Glovis attributed these declines to the impact of lower trading prices of non-ferrous metals, including copper and aluminum.

Hyundai Glovis anticipates challenges to persist in the second half of the year given the uncertain business environment. The company, however, is still determined to recover profitability in the mobility logistics area and will focus on aligning with potential increases in both production and sales volume of finished car manufacturers as global demand recovers.

Hyundai Glovis also aims to achieve visible business expansion in its strategic areas, such as battery recycling and smart logistics solutions via investments and collaborations.

"We are currently solidifying strategies for recovery and recycling operations of used batteries," Hyundai Glovis CEO Lee Kyoo-bok said during a conference call on Friday. "We will work on achieving concrete results through collaborations and investments in pre-processing technology during the second half of the year."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]