Mando announced on the 29th that its provisional operating profit for the second quarter (consolidated basis) was KRW 45.697 billion, down 40.4% from the same period of the previous year. During the same period, net profit also decreased by 51.7% to 38.837 billion won.
This was lower than both the operating profit (62.4 billion won) and net profit (45.1 billion won) consensus presented by financial information company AppnGuide.
External factors such as the rise in raw material prices and the high exchange rate in the first half of the year appear to have been the main reasons for the deterioration in profitability. This is because the production cost has increased, so even if you sell a lot, there will be less leftovers.
An official from Mando explained, “The decline in operating profit and net profit in the second quarter is attributed to the increased raw material prices and the exchange rate.”
However, sales in the second quarter showed an improvement. Mando’s sales in the second quarter increased by 12.9% year-on-year to 1.679 trillion won.
However, despite the overall top-line growth, there was a clear decline in sales in China due to the blockade of the main market, the Chinese market, in the first half of the year.
Looking at the change in global sales of Mando in the second quarter, sales in North America, India, and Europe increased compared to the previous quarter, but sales in China plunged 22.9% QoQ to 326.7 billion won. This is a decrease of 6.6% compared to the same period last year.
Jaeil Lee, a researcher at Eugene Investment & Securities, said, “Mando’s share of sales in the Chinese market is regarding 27% (as of 2021), and most domestic parts makers have significantly reduced their share in China along with Hyundai Motor and Kia’s shrinking sales. A slump in quarterly earnings is inevitable.”
Meanwhile, expectations for an earnings rebound are emerging in the second half of the year. This is because the market is expected to improve in line with the Chinese government’s aggressive economic stimulus measures.
Kim Jin-woo, a researcher at Korea Investment & Securities, predicted, “This second quarter will be particularly sluggish due to China, but it will get more attention in the second half of the year when Chinese auto production rebounds.”
