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Sun, December 10, 2023 | 17:15
Companies
Hyundai Motor closely monitoring Ukraine crisis
Posted : 2022-02-28 18:48
Updated : 2022-02-28 21:33
Baek Byung-yeul
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Hyundai Motor's manufacturing plant in St. Petersburg, Russia / Courtesy of Hyundai Motor
Hyundai Motor's manufacturing plant in St. Petersburg, Russia / Courtesy of Hyundai Motor

By Baek Byung-yeul

Hyundai Motor has been monitoring the escalating Russia-Ukraine military conflict closely, as it has and will adversely affect Korea's largest carmaker, which has been operating a plant in Russia, according to securities analysts Monday.

The analysts said Hyundai Motor may have difficulties exporting cars to Russia or suffer foreign exchange losses as Western countries impose economic sanctions following the invasion of Ukraine.

On Feb. 26, the U.S. and EU agreed to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which enables secure cross-border settlements and payments, to impose severe limits on Russian-denominated assets and the country's capacity to access international reserves.

Due to the sanction, Im Eun-young, an analyst at Samsung Securities, presumed that Hyundai Motor could suffer up to 200 billion won ($166 million) in losses and Kia could see up to 250 billion won in losses.

Kia, a sister brand of Hyundai Motor, also operates manufacturing lines there. In 2021, Kia sold 205,000 cars in Russia, and Hyundai sold 186,000, to become the second- and third-largest car brands there following local Russian brand Avtovaz.

"Hyundai Motor's wholesale numbers in Russia in 2021 amounted to 201,000, accounting for 5 percent of its global sales. As of September 2021, the sales of its Russian subsidiary stood at 2.3 trillion won and net profit at 134.6 billion won. The losses which could be caused by a decrease in the number of sales can be estimated at about 200 billion won, about 4 percent of net profit," the analyst said.

Lee Hyun-soo, a researcher at Yuanta Securities, also estimated, "If conflicts between Russia and Ukraine continue and Western countries impose economic sanctions on Russia, there is a possibility that Hyundai Motor will incur losses due to the fall in the ruble exchange rate."

An industry official familiar with the matter said the company will likely have no big problems in Russia as it produces and sells locally there.

"I think that Hyundai is closely watching the ongoing situation. The exclusion of Russia from the SWIFT system will have little impact on its business there," the official said.

Hyundai Motor shares fell sharply to 173,000 won from 180,500 won last Thursday when Russia launched its invasion of Ukraine. On Monday, the shares inched up by 1,000 won or 0.57 percent to 175,000 won from last Friday, while the benchmark KOSPI rose 0.84 percent to 2,699.18.


Emailbaekby@koreatimes.co.kr Article ListMore articles by this reporter
 
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