Hyundai Wia is forecast to achieve Q2 operating profit growth of 5.84% year-over-year to 59.5 billion won, overcoming parts supply disruptions through Mexico hybrid engine mass production starting in June and domestic volume recovery, according to a synthesis of eight major Korean securities firms' forecasts compiled by Yonhap Infomax on the 9th. The growth is driven by the company's Mexico factory launching mass production of Gamma2 T-GDI hybrid engines in June and domestic production rebounding after May supply chain disruptions. Securities analysts project revenue of 2.2495 trillion won for Q2, representing 3.25% growth, as Hyundai Wia transitions toward mobility-focused operations using proceeds from its defense division sale to invest in thermal management and robotics.
Securities Firms Forecast Hyundai Wia Q2 Operating Profit at 59.5 Billion Won
Yonhap Infomax compiled Q2 consolidated earnings forecasts for Hyundai Wia from eight major domestic securities firms submitted within three months, showing operating profit of 59.5 billion won, up 5.84% from the same period last year. Revenue is expected to reach 2.2495 trillion won, growing 3.25%.
![Hyundai Wia Q2 earnings forecast]()
Hyundai Wia Q2 earnings forecast [Source: Yonhap Infomax screen number 8031]
Hyundai Wia Overcomes May Supply Disruption Through June Production Recovery
Hyundai Wia is estimated to have experienced short-term production stagnation in May due to engine parts supply disruptions from a domestic supplier fire. The company is analyzed to have largely recovered from this through a sharp rebound in domestic finished vehicle volume in June combined with new operations at its Mexico factory.
Mexico Factory Launches Gamma2 T-GDI Hybrid Engine Mass Production in June
Mass production of Hyundai Motor Group's Gamma2 T-GDI hybrid engines that began at the Mexico factory is a core driver of Q2 performance. Expectations emerged that this will significantly contribute to profitability improvement through product mix enhancement, as global hybrid vehicle demand has surged recently.
HMGMA Georgia Plant Supplies Sportage HEV Engines from End of May
From the end of May, Hyundai Wia began supplying engines for Sportage HEV models produced at the new HMGMA plant in Georgia. The Mexico engine factory's utilization rate is forecast to stabilize above 70% in the second half. Sales growth in drivetrain components and constant velocity joints (CVJ) following increased SUV sales proportion is also expected to drive performance.
Won Weakness Creates Foreign Currency Receivables Valuation Gains
Financial and exchange rate conditions are favorable. Positive effects are expected from foreign currency receivables valuation gains due to won weakness amid the recent high exchange rate environment. However, possibilities were raised that ruble weakness could cause foreign currency borrowings and accounts payable valuation losses at the Russian subsidiary, creating some burden on pre-tax profit.
Yoo Ji-woong, analyst at Daol Investment & Securities, explained that "Q2 performance may be weak in the short term, but re-ignition of external growth momentum is expected in the second half," adding "Hyundai Wia's role will expand as Hyundai Motor Group's electrification business begins entering a volume growth phase."
Finished vehicle global production volume is forecast to begin increasing rapidly from Q3, providing mid- to long-term benefits. Mid- to long-term, the company was assessed as able to target a market worth approximately 3 trillion won through expanded engine production within the group.
![Hyundai Wia booth at Saudi defense industry exhibition]()
Hyundai Wia booth at Saudi defense industry exhibition [Source: Hyundai Wia]
Hyundai Wia Plans Thermal Management Investment Using Defense Division Sale Proceeds
Future challenges include the direction of the defense division sale and early establishment of new businesses. Since this division has served as a cash cow accounting for approximately 20% of company-wide operating profit, the performance gap must be filled if sold.
If the sale proceeds, Hyundai Wia plans to concentrate investment in future mobility businesses such as thermal management using the proceeds to secure mid- to long-term growth drivers. The company has set a goal of more than doubling related sales from 50 billion won last year to 100 billion won this year by expanding vehicle models with integrated thermal management systems.
FAQ
What is Hyundai Wia's Q2 operating profit forecast?
Eight major Korean securities firms forecast Hyundai Wia's Q2 operating profit at 59.5 billion won, representing 5.84% year-over-year growth, according to Yonhap Infomax data compiled on the 9th. Revenue is projected at 2.2495 trillion won, up 3.25%.
When did Hyundai Wia start mass production of hybrid engines in Mexico?
Hyundai Wia began mass producing Gamma2 T-GDI hybrid engines at its Mexico factory in June. The factory started supplying engines for Sportage HEV models produced at the HMGMA Georgia plant from the end of May, with utilization rates forecast to stabilize above 70% in the second half.
How will Hyundai Wia use proceeds from its defense division sale?
Hyundai Wia plans to concentrate investment in future mobility businesses including thermal management and robotics using defense division sale proceeds. The company aims to double thermal management sales from 50 billion won last year to 100 billion won this year by expanding vehicle models with integrated thermal management systems.
