SEOUL -- Hyundai Motor's operating profit soared more than 50% last year, despite a slight sales drop as the South Korean automaker benefited from improved profitability and popularity of its sport utility vehicle models.
Hyundai said on Jan. 22 that its operating profit hit 3.7 trillion won ($3.2 billion) in 2019, up 52.1% from a year ago. Its net profit almost doubled to 3.3 trillion won during the same period. The figures are all the more impressive given that its global sales volume fell 3.6% to 4.4 million units last year.
South Korea's largest automaker attributed its profit bump to a reduction of sales incentives in the U.S. and Chinese markets along with increased demand for its large SUV Palisade. A weak local currency also helped raise its operating profit by 1 trillion won.
"The figures show our strong will to improve profitability," said CFO Kim Sang-hyun in a conference call. "We will do our best to achieve our goal of 5% of operating profit margin this year."
Shares of Hyundai jumped 8.55% to 127,000 won, hitting a three-month high, on the back of the better-than-expected earnings announcement. The benchmark Kospi rose 1.23% to 2,267.25. Hyundai said that it will pay a dividend of 3,000 won per share, the same level as last year, with a promise to expand shareholder returns later.
Hyundai's impressive performance comes as the automaker gears up for its transition to a "mobility solutions" company by investing in flying cars, robotics and last-mile mobility. The company said last month that it will develop an urban air mobility platform business by combining personal air vehicles and mobility services by 2025.
At the CES trade show in Las Vegas earlier this month, Hyundai announced a partnership with Uber Elevate, the U.S. ride hailing company's team for flying cars. As part of the agreement, Hyundai will use its expertise in manufacturing to develop a purpose-built vehicle that Uber will use to provide urban air transport to customers.
Analysts say that Hyundai is turning to flying cars because autonomous driving is likely to take longer to commercialize due to safety concerns. At CES, Hyundai predicted that flying taxis will become a commercial reality earlier than autonomous driving.
"Hyundai Motor-Uber's [urban air mobility] is an alternative to autonomous driving, which faces difficulties both in technology and regulations," said Lee Sang-hyun, an analyst at IBK Securities.
Meanwhile, Kia Motors, Hyundai's smaller affiliate, said that its operating profit jumped 73.6% to 2 trillion won in 2019, while net profit rose 58% to 1.8 trillion won during the same period.
