Profitability vs. Cash Dividend
Hyundai Motor saw its operating profits plunge to the mid 7 trillion won (US$64.64 billion) last year, hitting a 4-year low. Even though its sales are all-time high, its operating profit decreased drastically due to the strong won and the weak currency of emerging countries.
Hyundai Motor said on Jan. 22 in a meeting announcing its 2014 performance results held at the headquarters in Yangjae-dong, Seoul that the company turned over 89.2563 trillion won (US$82.42 billion) last year, selling 4.961877 million units. The figure is up 2.2 percent from a year earlier, and it is the historical highest since the introduction of International Financial Reporting Standards (IFRS).
However, its operating profit was down 9.2 percent to 7.55 trillion won (US$6.97 billion), which is the lowest figure since it hit 5.9185 trillion won (US$5.47 billion) in 2010. Its operating profit to sales ratio was also down 1 percent to 8.5 percent from last year.
Hyundai Motor expects that its sales environment this year will not be favorable either, owing to the active operation of imported cars, the weak yen, and the fierce competition among its global competitors. Accordingly, the company has formulated its management policy to improve future competitiveness through the expansion of its investments. Also, it is aiming to sell 5.05 million units annually.
Meanwhile, Hyundai Motor has decided to pay a cash dividend of 3,000 won (US$2.77) per ordinary share on Jan. 22. The dividend rate to its market price is 1.7 percent, and its cash dividends total 817.3 billion won (US$754.73 million). Last year, the company paid 1,950 won (dividend yield of 0.9 percent) per share, amounting to a total of 534.4 billion won (US$493.49 million). Compared with the figure, Hyundai Motor raised its cash dividends by 54 percent. Therefore, the dividend payout ratio is to increase to 11.1 percent from 6.2 percent last year.
Previously, Hyundai Motor announced that it would raise the dividend in order to increase its shareholder value and take part in the government’s policy to revitalize the domestic economy.