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

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

© Reuters. FILE PHOTO: A shop sign of Hyundai is seen outside a car showroom in Bletchley, Milton Keynes, Britain, May 31, 2020. REUTERS/Andrew Boyers

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) -South Korea’s Hyundai Motor Co slightly missed analysts’ profit estimates as the global chip crisis drove down vehicle shipments and it said it expects it will take a long time to get back to normal chip supplies.

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

In the same period a year earlier it posted a loss of 336 billion won when it was hit by a one-time expense related to engine quality issues and recalls.

The profit was just shy of an average analyst forecast of 1.4 trillion won compiled by Refinitiv SmartEstimate.

“Hyundai Motor expects that on-year sales growth might slow down for the rest of 2021 amid adverse business conditions caused by the unstable supply of semiconductor chips,” Hyundai Motor said in a statement.

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

The global chip crisis, triggered partly by surging demand for laptops and consumer electronics during the pandemic, has shuttered auto production lines globally and forced automakers to slash shipment forecasts.

Hyundai previously said its on-year sales growth might slow in the second half of 2021 due to challenging business conditions, including the unstable supply of automotive chips.

Hyundai had turned in its best quarterly profit in about six years in the April-June quarter thanks to its conservative supply chain management that helped it to navigate the shortage better than other automakers.

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

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

Shares of Hyundai Motor were trading up 0.7% after the firm published its earnings results, compared with a 0.8% rise in the broader market .

($1 = 1,177.2300 won)

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