Hyundai Motor’s Q3 profit misses estimates as chip shortage takes a toll

SEOUL, Oct. 26 (BNA) South Korea’s Hyundai Motor Co. slightly missed analysts’ earnings estimates as the global chip crisis slashed auto shipments and said it expects it will take a long time to return to normal chip supplies.

Hyundai, which together with its subsidiary Kia Corp. is among the world’s 10 largest automakers by sales, reported a net profit of 1.3 trillion won ($1.10 billion) for the July-September quarter, according to Reuters.

In the same period last year, it posted a loss of 336 billion won when it was hit with one-time expenses related to engine quality issues and recalls.

The profit was shy of the average analyst forecast of 1.4 trillion won collected by Refinitiv SmartEstimate.

“Hyundai Motors expects year-over-year sales growth to slow for the rest of 2021 amid adverse business conditions stemming from the unstable supply of semiconductor chips,” Hyundai Motor said in a statement.

The automaker said the global chip shortage will likely continue until the end of this year or next, and is expected to take a long time to get back to normal.

The global chip crisis, caused in part by increased demand for laptops and consumer electronics during the pandemic, has shut down car production lines globally and forced automakers to lower shipping expectations.

Hyundai previously said its year-over-year sales growth could slow in the second half of 2021 due to challenging business conditions, including an unstable supply of auto chips.

Hyundai posted its best quarterly profit in nearly six years in the April-June quarter thanks to conservative supply chain management that helped it weather shortages better than other automakers.

But the prolonged crisis forced Hyundai to suspend production during the third quarter.

This month, Hyundai’s chief global operating officer Jose Munoz said the automaker wants to develop its own chips to reduce dependence on others.

Hyundai Motor shares traded 0.7% higher after the company reported its earnings results, compared to a 0.8% rise in the broader Kospi market.

HF