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TRANSCRIPT
Hyundai Motor CompanyInvestor Presentation August 2013
1
Table of Contents
1. Executive Summary
2. Key Strengths for HMC
3. Future Strategies
4. Market Update by Region
Appendix
1. Executive Summary
3
Executive Summary
Balanced Sales Growth
and Diversified Portfolio
Strong Performance
through the Cycle
Structural Improvement in
Core Competitiveness
Superior Performance Relative to
Peer Groups
Volume Growth
Value Growth
Cost StructureImprovement
Green Car
Current Outstanding Performance Prudent Future Strategies
2. Key Strengths for HMC
5
Strong Performance Through the Cycle
3.9%4.0%
5.1% 5.1%
5.4%
5.7%
2007 2008 2009 2010 2011 2012
7.3% 6.3%
-7.4%
6.6% 8.1% 11%9.2% 8.8%
-5.0%
9.3%
19.3% 24%
2007 2008 2009 2010 2011 2012
Automaker Value Growth HMC Value Growth
2,603 2,6543,239
3,7014,099
4,392
2007 2008 2009 2010 2011 2012
Steady Growth in Global Sales1
(Unit:: 1,000 vehicles)… and Strengthening Global Market Share
1. Retail sales excluding CKD sales2. Interbrand
1
Supported by Relatively Higher Brand value Growth2
than the Industry… and Improving Residual Value of Vehicles
+7.1%
61.7%
45.8%
39.4%
59.8%
59.5%
46.5%
35%
45%
55%
65%
'08 MY '09 MY '10 MY '11 MY '12 MY '13MY
Elantra Sonata Santa Fe
6
Balanced Sales Growth through Global Manufacturing Plants
(Unit: 1,000 vehicles)2012 July (YTD) 2013 July (YTD)
Turkey PlantIndia PlantChina PlantUS Plant Czech Plant Russia Plant
US
427419
Korea
384388
EU
244266
Middle East and Africa
298299
India
207215
China
572427
LatAm
210143
Worldwide (YTD)
’12 July ‘13 July
2,495 2,683
7 manufacturing plants ( ), 6 R&D facilities ( ), 14 direct sales subsidiaries ( ), sales in more than 190 countries globally
Source: Company data (Retail sales excluding CKD sales)
2
Brazil Plant
+47%
+7.5%
-0.8%
+34%-8.3%
-3.9%
-0.2%
+2.0%
7
Geographically Diversified Portfolio (%)
Balanced Sales Growth by Diversified Business Portfolio
Marketable Product Mix2 (%)
10.9
27.9
31.5
17.5
15.3
18.5
28.2
27.5
14.1 8.2
42.2
25.4
5.0
30.9
25.8
18.0
6.4
46.7
0 20 40 60 80 100
Honda
Toyota
Fiat
VW
Domestic North America Europe Asia Others
1
Source: Company data for HMC 2012 Global Retail Sales, Competitor information from public filings (2012FY Earnings Results)1. Others include 38.0% of Brazil sales2. A+B+C=Compact+Sub-Compact+Mini; D+E+F=Mid-Size+Large+Luxury; RV=SUV+MPV, Others=PUP and others
2
18.9 31.416.7 14.6 18.4Hyundai
1.5
24.0
6.2
45.9
40.1
70.9
61.6
1.2
19.4
18.5
15.6 31.1
34.1
12.8
3.9
13.2
0 20 40 60 80 100
Honda
Toyota
Fiat
VW
A+B+C D+E+F RV Others
18.3 7.555.3 18.9Hyundai
88
Structural Improvement in Core CompetitivenessEnhanced Brand Value is leading sales growth and reduce incentive spending. Subsequently, reduction in incentive is resulting ASP increase and repeated Brand Value improvement.
Source: Auto data/PIN Data, ASP based on actual transaction prices
Structural Improvement
EnhancedBrand Value Sales Growth Reduction in
Incentives ASP Increase
Structural Improvement from US Market
ASP (Sonata, $)
(%)
18,266 3.9
18,019 (1.4)
21,821 21.1
23,148 6.0
22,700 (2.4)
Sales (‘000) M/S (%)
(%) (%pt)
401 (14.0) 3.0 0.1
435 8.3 4.2 1.2
538 23.7 4.6 0.4
646 20.0 5.1 0.5
703 8.8 4.9 (0.2)
US Market Brand Value($ in Billion)
2008 4.8
2009 4.6
2010 5.0
2011 6.0
2012 7.5
Incentive (PNVS, $)
(%)
2,194 20.7
2,506 14.2
1,649 (34.1)
1,005 (39.1)
946 (5.9)
9
3.9%
6.1%
8.8%
10.3% 10.0% 9.6%
1102.6
1,276.4
1,156.3
1,108.1 1,126.9
1,103.3
2008 2009 2010 2011 2012 2013 1H
HMC OP Margin KRW/USD Avg.
Increased Resilience to FX FluctuationsHMC has reduced its exposure to FX fluctuations and made efforts to reduce risk from FX fluctuations
Portion of Exports from Korea Plant OP Margin & KRW/USD Exchange Rate Trend
Source: Company data* Hyundai OP margin for 2008-2009 based on K-GAAP, 2010–2012 based on K-IFRS
(Unit: KRW/USD)
52%59% 59% 60%
71% 70% 70% 72% 75%
48%41% 41% 40%
29% 30% 30% 28% 25%
2005 2006 2007 2008 2009 2010 2011 2012 2013 1H
Korea Domestic & Overseas Plant Sales Export from Korea Plant
3
HMC has implemented hedging, settlement currency diversification and improving export ASP to mitigate impact from FX
10
4,846 4,604 5,0336,005
7,50072
6965
6153
2008 2009 2010 2011 2012
Brand Enhancement
Source: Interbrand, JD Power
Enhancement in Brand Value
US Customer Retention Rate
(Ranks)
(Ranks)(Unit: US$ in Millions)
+9.3%+19.3%
47.0% 47.0%
60.0% 64.0%1311
3 1
2009 2010 2011 2012
3
Highest growth rate among automakers for two consecutive years
In US market, Hyundai achieved the highest retention rate among competitors in 2012
+13.0%p
+4.0%p
Awards and Accolades
+24.9%Date Award Title Region Model(s)
2013.02 ’13 Car of the Year Canada Santafe
2013.02 Rank 1st in VDS mid-size segment U.S. Sonata
2013.01 Future Auto Award 2013 Germany Ix35 FCEV
2012.11 Car of the Year 2013 Brazil HB20
2012.08 Car Buyer Car of the Year 2012 U.K. i30
2012.07 Company Car of the Year Germany i40
2012.04 Car of the Year Russia Solaris
2012.03 Best Auto 2011 Russia Solaris
2012.03 Best Value in America U.S. Accent, Elantra, Coupe and Tucson
2012.02 Car of the Year U.K. i30
2012.02 Carmaker of the Year U.K. Hyundai
2012.01 Car of the Year China Sonata
2012.01 ‘12 N. American Car of the Year U.S. Elantra
2011.12 Family Car of the Year Germany ix20
2011.04 Car of the Year Russia ix35
11
Utilization & InventoryHigh global utilization and low inventory level enables the company to promote value pricing strategy.
HMC Global Utilization Trend HMC Global/US Inventory Trend
Source: Company data/US Autodata
(Unit: %) (Unit: Month of Supply)
1
2
3
4
Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13
Overseas Inventory US Inventory
89.9 91.5
100.6
107.4108.4
105.6
2008 2009 2010 2011 2012 2013 1H
3
12
Value Pricing StrategyWith value pricing strategy, ASP is keep improving while incentive spending is decreasing.
Average Selling Price (ASP) by Export Market US Incentive Trend(Unit: USD 1,000) (Unit: USD)
Source: Company Data, US Autodata, ASP is based on HMC headquarter results
6
8
10
12
14
16
18
2002 2004 2006 2008 2010 2012
LatAm Middle East and Africa Asia Pacific Total Export
Export ASP CAGR: +6.0%
US$15,000
3
2,427
946
865
1,804
872
2,206
600
1,000
1,400
1,800
2,200
2,600
2006 2007 2008 2009 2010 2011 2012
Hyundai Toyota Honda
13
6.1%
-3.7%
-0.2%
1.8%
0.0%
-3.0%
8.8%
2.6%
6.9%
5.6%6.2%
5.2%
10.3%
0.9%2.1%
7.1%
5.7%5.1%
10%
4.8%5.5%
6.0%4.9%
6.3%
9.6% 9.6%
5.8% 5.9% 5.5%6.4%
Consistent Profitability Relative to PeersHMC has shown the most consistent operating performance relative to competitors during the past few years.
Source: Public FilingsNote: Based on Consolidated Financials, Calendarized Financials for Japanese Firms* Hyundai Financials for 2009 based on K-GAAP, 2010–2012 based on K-IFRS
2009 2010 2011 2012
Consolidated Operating Margin Trend
4
2013 1H
3. Future Strategies
15
Sustainable Success Going Forward
Key Strategy for Ongoing Growth in Earnings
Consistent revenue growth and enhanced profitability to be achieved through structural improvement in product/brand value, balanced capacity expansion and cost structure improvement
Volume Growth
Balanced Capacity Expansion and
New Model Launch
Value Growth
Higher ASP and Lower Incentive Driven by
Enhanced Product and Brand Value
Cost Structure Improvement
Higher Cost Competitiveness fromVertical Integration
Green Car
Develop Independent and Distinctive Technology
16
Value Growth – Product CompetitivenessElantra, Sonata, and Santa Fe are experiencing high demand with better specification.
Specification Comparison
Elantra (Compact Sedan)
Sonata (Mid-size Sedan)
Santa Fe (Compact CUV)
1
Specification Hyundai Elantra (’11) Toyota Corolla (’09) Honda Civic (’12)
Displacement 1.8L 1.8L 1.8L
Max. Power 148@6,500 132@6,000 140@6,300
Mileage 28mpg / 38mpg 26mpg / 34mpg 28mpg / 39mpg
Specification Hyundai Sonata (’10) Toyota Camry (’12) Nissan Altima (’13)
Displacement 2.4L 2.5L 2.4L
Max. Power 198@6,300 178@6,000 182@6,000
Mileage 24mpg / 35mpg 25mpg / 35mpg 27mpg / 38mpg
Specification Hyundai Santa Fe (’13) Toyota RAV4 (’13) Chevrolet Equinox (’10)
Displacement 2.4L 2.5L 2.4L
Max. Power 190@6,300 179@6,000 182@6,700
Mileage 21mpg / 29mpg 22mpg / 28mpg 22mpg / 32mpg
Source: Company Data
17
Value Growth - Higher ASPTransaction price of major models in US market has improved with structural improvement.
Source: PIN data (Annual average transaction price in US market)
Transaction Price Trend in US Market
Compact Sedan(Unit: USD 1,000)
Mid-size Sedan Compact CUV
26.5
22.3
22.6
23.7
25.4
23.5
2009 2010 2011 2012
Santa Fe RAV4 Equinox
23.5
22.7
23.1
17.6
21.1
22.421.6
22.8
2007 2008 2009 2010 2011 2012
Sonata Camry Accord
19.9
18.0
18.9
15.5
19.6
17.8
15.8
19.318.6
2007 2008 2009 2010 2011 2012
Elantra Corolla Civic
4-Cyl, 2WD
18
Volume GrowthHMC’s global sales will be increased with capacity expansion and by maintaining high utilization rate.
Capacity Expansion and Sales Plan
Source: Company data* Above sales figures are based on shipment** BHMC : Beijing-Hyundai Motor Company / CHMC : Sichuan-Hyundai Motor Company
Production Capacity Expansion Sales Plan by Plants
(Unit: 1,000 Vehicles) 2012 2013 (P) 2014 (P) Chg (%) 2012 2013 (P) Chg (%)
Korea 1,870 1,870 1,870 0.0 1,911 1,850 -3.2
US 300 370 370 0.0 361 388 +7.4
China (BHMC) 900 900 1,050 +16.7 856 970 +13.3
India 600 600 600 0.0 641 633 -1.3
Turkey 100 200 200 0.0 86 89 +3.6
Czech 300 300 300 0.0 303 300 -1.0
Russia 200 200 200 0.0 225 220 -2.0
Brazil 150 150 170 +13.3 27 150 +452.1
China (CHMC) – 60 150 +150.0 – 60 –
Overseas 2,550 2,780 3,040 +9.4 2,499 2,810 +12.4
Total 4,420 4,650 4,910 +5.6 4,410 4,660 +5.7
2
19
Cost Structure Improvement (Platform Integration)Platform integration will reduce development cost and realize greater economies of scale per platform.
Platform IntegrationIntegration Schedule Reduction of Model Development Time
No. of Models per Type of Platform Increasing portion of models with integrated platform
2002 2009 2011 2013 (P)
Integrated Platforms 0 6 6 6
Total No. of Platforms 22 18 11 6
Total No. of Models 28 32 36 40
Avg. of 40 months → 19 months40
33
19
2002 2009 2013
Source: Company Data
Small Mid-size Large Coupe Frame SUV LCV
Mass Production Niche Market
New81%
Old19%
2011 2013 (P)2012
3
New62%
Old38%
New75%
Old25%
20
Green CarHMC independently developed and obtained distinctive technology on HEV system.
Developing Green Cars: HEV
Hybrid Vehicle Strategy Hybrid Vehicle
HEV Performance Comparison
Sonata HEV
Displacement: 2.4ℓ
Max. Power: 206 hp
Mileage: 34 / 40 mpg
Commercial production: 2011 (US & Korea)
Source: Company data
4
A “Fast Second Company” - strategy to quickly become a # 2 player by competing with industry leading players
Gradual expansion of HEV applied automotives (mid-size, SUV, heavy vehicles)
Enhancing fuel efficiency
Focusing on HEV system improvement and obtaining distinctive components technology
Specification Sonata HEV Camry HEV Altima HEV
System Power 206 hp 200 hp 198 hp
Battery Li-PB 34kW Ni-MH 33kW Ni-MH 30kW
Mileage (City/Highway) 36mpg / 40mpg 43mpg / 39mpg 35mpg / 33mpg
Motor 30kW (40.2hp) 105kW (141hp) 105kW (141hp)
System Parallel System Power Split System Power Split System
21
Green CarHMC has been chosen to participate in European FCEV demonstration program together with Daimler.
Developing Green Cars: FCEV
Fuel Cell Electric Vehicle FCEV Vehicle
Development Roadmap Assessment of Light-duty FCEV Manufacturers
Tucson ix FCEV
Max. distance: 650 km
Max. speed: 160 km/h
Fuel Efficiency: 31km/ℓ
Commercial production: TBD
Phase 1 (~2006)— Develop
Stack Technology
Phase 2 (2007~2011)— Improve
Performance
Phase 3 (2012~)— Commence
Small Production
Santa Fe FCEV
Tucson FCEV
Fuel Cell Electric Bus
Tucson FCEV (2nd Gen.)
Mohave FCEV
Fuel Cell Electric Bus (2nd Gen.)
Tucson ix FCEV
Source: Company data, Pike Research (August 10, 2011)
69.9 66.7 66.1 65.1
54.4
43.936.8
Daimler Honda Toyota HMC GM Nissan Ford
4
Assuring “FCEV Leading Maker” position by demonstration program
Commenced production of 1,000 vehicles from 2013 to 2015
Mass production technology in process through independently developed “FCEV Stack Technology”
4. Market Update by Region
23
Korea
Source: KAMA, Company data
Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)
1,464 1,474 1,411 1,380
45.0%46.4% 47.3% 47.9%
2010 2011 2012 2013 July
Industry M/S
161 170 162 78
226 250 231
129
94 77 112
82
177 185 162
96
2010 2011 2012 2013 JulyCV RV Med + Large PC Small PC
658682 667
385
Market Strategy
New Model Launch
Maxcruse_Santa Fe Long body (Feb 2013) : Enhance sales volume and model mix with diversifying SUV model
Avante F/L (Aug 2013) : Add Diesel models to improve competitiveness with the imported vehicles
Genesis (2H 2013) : Targeting luxury market with all new model to improve profitability and brand
Corresponding Measures on Increase of Imported Vehicle
Enhanced Credibility
ImprovePremium Image
Expand Diesel Line-up
Test drive for comparison with imported model
Develop options for domestic customers
Diversify product line up and Power train
Upgrade and expand sales/service network
Enhasing Diesel Line-up like Avante and Grandeur in domestic market to improve competitiveness
(‘13 P)
24
United States
Source: Company data
Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)
11,590 12,778
14,492 15,340
4.6%5.1% 4.9% 4.7%
2010 2011 2012 2013 July
Industry M/S
184251 298
203
229
264 277
150
125
131128
74
2010 2011 2012 2013 JulyRV Med + Large PC Small PC
538
646
703
427
Market Strategy
Face Lift Model Launch Equus (March 2013) / Elantra (2H 2013): Enhance Premium
segment volume to improve brand image and keep strong sales trend in non-premium segment by Face lift model
Premium PC Sales
(‘13 P)
25
China
Source: Company data* Market demand based on Passenger Vehicle
Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)
11,12011,935 12,620
13,850
6.3% 6.2% 6.7% 7.1%
2010 2011 2012 2013 July
Industry M/S
519 472567
363
65 113
117
69
120 154
172
154
2010 2011 2012 2013 JulySUV Mid-size PC Small PC
704740
856
586
Market Strategy
New Model Launch Mistra CF (2H 2013) : Expand model line-up with customized
model to Improve customer profile and brand perception
Dealer Enhancement Plan
600
720
800860
2010 2011 2012 2013(P)Number of Dealers
Focus on improving customer services and brand image
Sonata HEV (2H 2013) : Launch Eco friendly model to enhance brand image
(‘13 P) *
26
Europe
Source: Company data, ACEA
Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)
15,393 15,316 14,015 13,481
2.6%2.9%
3.5%3.0%
2010 2011 2012 2013 July
Industry M/S
274 258294
161
80 139
145
81
8
6
5
2
2010 2011 2012 2013 JulyOthers RV PC
362
403444
244
Market Strategy
New Model Launch
i10 (2H 2013) : Improve sales volumn by launching A seg model under economic downturn period
Expand Direct Distribution Coverage
Indirect57%
Direct43%
Indirect31% Direct
69%
2011 2012
Direct distribution coverage– As of 2011: UK / Spain / Italy / Norway / Poland
/ Czech (including Slovakia)– Newly established in 2012: Germany / France
Santa Fe Long body (2H 2013) : Enhancing SUV Line-up to improve sales and brand
Strategy to overcome the economic crisis Focus on qualitative growth over quantitative growth 5 major plan for qualitative growth
→ Brand enhancement / improve product competitiveness / penetrate true fleet market / improve dealer network / strengthen services
(‘13 P)
27
India
Source: Source: SIAM, Company data* Market demand based on Passenger Vehicle ** Sales data based on factory sales
Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)
2,309 2,430 2,656 2,590
15.4% 15.4% 14.7% 15.3%
2010 2011 2012 2013 July
Industry M/S
357 373 391
224
247 242250
157
2010 2011 2012 2013 JulyExport Domestic**
604 615641
381
Market Strategy
New Model Launch Santa fe (2H 2013)
i10 (2H 2013)– Entrance to the Indian compact-mid market– Compete with Ford FIGO
Specification Comparison
Grand i10 FIGO
Displacement 1,200cc 1,200cc
Max. Power 83ps / 11.6 tq. 71ps / 10.4 tq.
Mileage 18.9km/ℓ 15.6km/ℓ
MSRP 429K Rs ~ 612K Rs 427K Rs ~ 632K Rs
(‘13 P)*
28
Other Emerging MarketsAchieving consistent sales volume growth through the years.
Africa-middle East and LatAmSales Breakdown by Major Emerging Markets Sales Volume (000’s) and CAGR (%)
Source: Company Data, 2012 HMC Global Retail Sales (excludes CKD sales)
Korea15.2%
N. Am.19.1%
Europe15.2%
Chindia28.3%
LatAm6.1%
Asia-Pacific 3.8%
Africa-Middle East
11.2%
Turkey 1.1%
Africa-ME
LatAm
82115 128
165 177 185
237258 268
2004 2005 2006 2007 2008 2009 2010 2011 2012
118185 208
253292 316
419448
493
2004 2005 2006 2007 2008 2009 2010 2011 2012
+16%
+20%
Appendix
30
Balance Sheet (K-IFRS Consolidated)
(KRW in Billions) 2012 2013 1H Change
Assets 121,538 129,701 8,163
Current Assets 54,848 57,838 2,990
Cash and Cash Equivalents1 19,143 22,180 3,037
Liabilities 73,620 77,402 3,782
Current Liabilities 32,836 34,289 1,453
Short and Long-term Debt 45,207 47,144 1,937
Provision 7,009 7,460 451
Equity 47,918 52,299 4,381
Current Ratio(%) 167.0% 168.7%
Debt/Equity (%) 94.3% 90.1%
Net Debt 26,064 24,964
Source: Company filings (K-IFRS Consolidated)1. Cash and Cash Equivalents = Cash + Short-term Financial Instruments
31
Income Statement (K-IFRS Consolidated)
(KRW in Billions) 2012 1H 2013 1H Growth
Revenue 42,105 44,551 5.8%
Gross Profit 10,049 10,023 △0.3%
Margin (%) 23.9% 22.5%
SG&A 5,419 5,748 6.1%
Portion (%) 12.9% 12.9%
Operating Profit 4,631 4,275 △7.7%
Margin (%) 11.0% 9.6%
Recurring Profit 6,296 5,939 △5.7%
Margin (%) 15.0% 13.3%
Net Income 5,001 4,611 △7.8%
Margin (%) 11.9% 10.3%
Depreciation 824 878
Amortization 418 411
EBITDA1 5,873 5,564
Source: Company filings (K-IFRS Consolidated)1. EBITDA = Operating Profit + Depreciation + Amortization
32
Financial Summary by Division
Source: Company filings (K-IFRS Consolidated)
(KRW in Billions) 2012 1H 2013 1H Growth
Sales Revenue 42,105 44,551 5.8%
Automotive 36,323 36,720 1.1%
Finance 4,041 5,116 26.6%
Other 1,741 2,715 55.9%
Operating Profit 4,631 4,275 △7.7%
Automotive 4,065 3,427 △15.7%
Finance 640 674 5.4%
Other 76 188 147.4%
Consolidation Adjustment △150 △14 △90.7%