HL Mando is projected to record 100 billion KRW in operating profit for Q2, representing a 3% decline compared to the same period last year, while revenue is expected to reach 2.451 trillion KRW, up 2.1%, according to a consolidated forecast from 11 major domestic securities firms compiled by Yonhap Infomax. The modest growth and slight profitability decline are attributed to demand contraction in the Chinese market and reduced production by Hyundai Motor and Kia, which together account for 47% of HL Mando's sales. Raw material cost increases that began in Q1 continued into Q2, further pressuring margins, with the company's raw material burden rate estimated at 66%, the lowest level in 10 years. HL Mando operates in Korea's automotive parts sector, supplying chassis components and advanced driver assistance systems to major automakers globally.
Securities Firms Project 100 Billion KRW Q2 Operating Profit for HL Mando
Yonhap Infomax compiled Q2 earnings forecasts for HL Mando from 11 major domestic securities firms submitted within one month. The consensus operating profit forecast stands at 100 billion KRW, down 3% year-over-year. Revenue is projected at 2.451 trillion KRW, reflecting 2.1% growth compared to the same quarter last year.
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HL Mando Q2 earnings forecast [Source: Yonhap Infomax screen number 8031]
China Market Contraction and Hyundai-Kia Production Decline Impact Sales
Securities analysts identified the Chinese market and domestic automotive industry shipment declines as primary causes of stagnant earnings. The Chinese market, which accounts for 20% of HL Mando's sales, experienced frozen new vehicle demand. Additionally, global factory shipments by Hyundai Motor and Kia decreased approximately 3% year-over-year.
Raw material cost increases continued from Q1 into Q2, slowing profitability improvement. Moon Yong-kwon, analyst at Shinyoung Securities, stated that HL Mando's raw material burden rate was estimated at 66% last year, the lowest level in the past 10 years. Semiconductor price burden increased by approximately 6.6 billion KRW in Q1. The timing and extent of cost settlements with customers will be a variable for H2, according to the analyst.
North America EV Growth and India Market Expansion Support Revenue
North American electric vehicle customer volume increases are expected to drive revenue growth. Major customers including Tesla recorded Q2 global deliveries of 480,000 units, exceeding market expectations, with production recovering to 452,000 units.
The India market is projected to contribute additional gains. HL Mando assumed alternative chassis component supply following fire incidents at facilities including Hyundai Mobis' India plant. India regional sales are analyzed to show steep growth of approximately 19% year-over-year.
Europe sales are also expected to increase alongside India, driving overall company revenue growth and defending operating profit at last year's level.
Analysts Expect Cost Recovery and Robotics Business Growth in H2
Securities firms anticipated HL Mando will succeed in H2 earnings recovery. Raw material price increases that constrained H1 performance are projected to be substantially compensated within the year through price linkage systems with customers or foreign exchange compensation receipts.
The company is expected to benefit from robotics market expansion. As North American customers' humanoid robot mass production becomes visible, the possibility of HL Mando receiving robot actuator orders is growing. HL Mando is currently conducting technical consultations with major customers.
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HL Mando robot actuator [Source: HL Mando]
HL Mando is showing favorable order flow. Securities firms diagnosed that achieving the annual order target of 13.2 trillion KRW is sufficiently possible.
FAQ
What is HL Mando's projected Q2 operating profit?
HL Mando's Q2 operating profit is forecast at 100 billion KRW, representing a 3% decrease compared to the same period last year, based on consensus estimates from 11 major domestic securities firms compiled by Yonhap Infomax.
Why is HL Mando's Q2 profitability declining despite revenue growth?
The profitability decline is attributed to demand contraction in the Chinese market (which accounts for 20% of sales), reduced production by Hyundai Motor and Kia (47% of sales), and continued raw material cost increases that began in Q1, with semiconductor costs alone rising by approximately 6.6 billion KRW.
What factors support HL Mando's revenue growth in Q2?
Revenue growth is supported by North American electric vehicle customer volume increases, with Tesla and other major customers recording Q2 global deliveries of 480,000 units and production of 452,000 units, as well as India market sales growth of approximately 19% year-over-year following alternative supply arrangements after fire incidents at competitor facilities.
