SEOUL -- Hyundai Motor turned in its best quarterly operating profit in almost two years and said it was on track for higher profit margins in 2020, powered by sales of crossovers such as the Palisade and Kona.
Net profit for the October-December period came in at 839 billion won ($721 million), the automaker said on Wednesday. Operating profit was 1.24 trillion won ($1 billion), the highest since the second quarter of 2017.
Robust crossover sales helped Hyundai's U.S. vehicle sales grow, analysts said, though its sales in China continued to struggle.
The better-than-expected earnings indicate that measures by Hyundai Motor Group heir-apparent Euisun Chung to revamp the image of the automaker known for its sedan-heavy lineup are beginning to pay off.
While overall vehicle sales for the South Korean company held mostly steady on year over October-December, its bottom line benefited as high-margin crossovers accounted for more of the sales mix at 42 percent versus 37 percent a year earlier.
Hyundai said it would meet its target for a 5 percent operating profit margin this year, versus 3.5 percent in 2019, by selling even more crossovers and launching fully redesigned versions of some of its best-selling models, the Elantra sedan and the Tucson CUV.
"We understand that achieving this year's operating profit margin of 5 percent is more important than ever," Kim Sang-hyun, head of finance and accounting division, said on an earnings call.
"The company views this year as the first to fully establish a virtuous sales cycle by optimizing supplies, profits and strengthening brand competitiveness," Kim said. "We will do our best to secure a sustainable revenue base in a difficult business environment."
Sales for Hyundai and affiliate Kia hit a seven-year low in 2019 as business in China slumped, missing their target for a fifth time, but the companies have forecast better numbers for this year.
Hyundai expects utility vehicles to account for about 43 percent of its sales in 2020, helped by the launch of a new premium Genesis brand crossover.
"The market has been skeptical of the 5 percent profit margin target, but the target seems to be achievable thanks to new Genesis models," said Lee Jae-il, an analyst at Eugene Investment & Securities.
While Hyundai is seeing a recovery in U.S. sales, thanks to demand for new crossovers and a favorable currency exchange rate, its business in China continues to suffer amid a broader slowdown in the world's biggest auto market.
Its passenger car sales in China fell 4.8 percent on year in 2019.
Hyundai, however, expects its wholesale vehicle sales in China to reach 730,000 this year from 650,000 vehicles in 2019.
It also said it was looking for the best time to launch its premium Genesis brand in China and Europe.