PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,200 per share · Prices as of the 2026-10-02 close
Revenue has climbed to record quarterly levels, yet tariffs and upfront spending on new businesses have pushed the operating margin lower, leaving the company in a transition phase where a defense divestment and thermal-management capacity expansion are unfolding at once.
Second-quarter 2026 revenue reached KRW 2.354 trillion, a record quarterly level, but operating profit of KRW 50.4 billion left the operating margin in the low 2 percent range.
The company attributed the profit decline to United States tariffs and investment costs tied to ramping up thermal-management parts and hybrid engines.
Thermal-management revenue jumped 305.1 percent year on year in the second quarter of 2026, and the company plans to lift capacity coverage to one million units a year by 2028.
A plan to transfer the defense Special Products Division, reported at KRW 340 billion to 400 billion in annual revenue, to Hyundai Rotem within this year is under way, and the labor union opposes it.
The debt-to-equity ratio fell from 102.1 percent in 2022 to 72.8 percent in 2025, and 2025 cash flow from operations was KRW 404.1 billion.
Hyundai WIA is shifting its center of gravity from an auto-parts maker supplying engines, constant velocity joints, four-wheel-drive components and modules to Hyundai Motor and Kia, toward integrated thermal management systems and robotics.
In the second quarter of 2026, vehicle components revenue was KRW 2.180 trillion and the other segment KRW 173.9 billion, up 8.6 percent and 1.6 percent year on year respectively.
Profitability differs sharply by segment: in the same quarter, vehicle components operating profit fell 33.4 percent to KRW 33.1 billion for a 1.5 percent margin, while the other segment posted KRW 17.3 billion in operating profit and a 9.9 percent margin.
Industry observers describe the defense Special Products Division as a high-margin business that accounts for more than half of the other segment's revenue.
The company has set a direction in which, after selling its machine tool business in 2025, it also divests the defense division and reorganizes around auto parts and future manufacturing solutions.
In thermal management, it began mass production of an integrated system, supplying the climate control unit and a coolant integration module for Kia's purpose built vehicle PV5, and in 2026 started coolant module production at its Slovakia unit while preparing climate systems for combustion and hybrid vehicles in India.
On engines, it operates plants in Korea, Shandong in China, Mexico, Russia and India. Customer concentration remains group centered: at CES 2026 the company said it aims to reduce its roughly 100 percent revenue dependence on Hyundai Motor Group to around 50 percent over the medium to long term.
In robotics, the focus is on manufacturing and logistics automation rather than developing humanoids in house, expanding artificial intelligence factory system integration and smart parking businesses on the back of experience building the Singapore innovation center and the Georgia plant in the United States.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩2.2T | ₩56.3B | 2.6% |
| 2025Q3 | ₩2.2T | ₩51.8B | 2.4% |
| 2025Q4 | ₩2.1T | ₩47.7B | 2.3% |
| 2026Q1 | ₩2.2T | ₩51.6B | 2.4% |
| 2026Q2 | ₩2.4T | ₩50.4B | 2.1% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩8.2T | ₩212.1B | ₩65.4B | 2.6% | 2.0% | 102.1% |
| 2023 | ₩8.6T | ₩229.2B | ₩91.5B | 2.7% | 2.7% | 81.2% |
| 2024 | ₩8.2T | ₩218.8B | ₩120.4B | 2.7% | 3.3% | 75.7% |
| 2025 | ₩8.5T | ₩204.4B | ₩99B | 2.4% | 2.7% | 72.8% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04
Annual results show revenue stuck in the KRW 8 trillion range with a gradually eroding margin.
Revenue was KRW 8.208 trillion in 2022, KRW 8.590 trillion in 2023, KRW 8.181 trillion in 2024 and KRW 8.482 trillion in 2025, while operating profit slipped from KRW 229.2 billion in 2023 to KRW 218.8 billion in 2024 and KRW 204.4 billion in 2025, taking the operating margin from 2.7 percent to 2.4 percent.
Net profit attributable to owners rose from KRW 65.4 billion in 2022 to KRW 120.4 billion in 2024, then eased to KRW 99.0 billion in 2025.
Quarterly, revenue bottomed at KRW 2.089 trillion in the fourth quarter of 2025 before rising to KRW 2.179 trillion in the first quarter of 2026 and KRW 2.354 trillion in the second, yet operating profit stayed near KRW 50 billion, moving from KRW 56.3 billion in the second quarter of 2025 to KRW 51.8 billion, KRW 47.7 billion, KRW 51.6 billion and KRW 50.4 billion, compressing the quarterly operating margin into the low 2 percent range.
The company cited United States tariff measures and upfront investment for ramping up thermal-management parts and hybrid engines as the reason profit fell despite revenue growth. Early operating costs in thermal management and lower Russian production volumes also weighed on profitability.
Net profit followed a different path: the third quarter of 2025 brought a KRW 16.3 billion net loss attributable to owners, while the first and second quarters of 2026 delivered KRW 31.7 billion and KRW 48.7 billion, and pretax profit in the second quarter of 2026 rose 289.9 percent year on year to KRW 75.1 billion, pointing to a large contribution from non-operating items.
The balance sheet has improved, with the debt-to-equity ratio down from 102.1 percent in 2022 to 72.8 percent in 2025 and operating cash flow of KRW 592.0 billion in 2024 and KRW 404.1 billion in 2025.
End demand is tied directly to group vehicle output. Hyundai Motor's global wholesale sales fell 6.9 percent year on year to 991,885 units in the second quarter of 2026, with domestic volumes down 16.4 percent because of supply disruption from a supplier fire.
By contrast, hybrid sales hit a quarterly record and lifted electrified vehicle volumes. That mix cuts both ways for suppliers: overall volume is volatile, but stronger hybrid powertrain demand supports engine and driveline volumes.
Tariffs remain a sector-wide variable, as automakers also saw profitability soften on United States tariffs, raw material costs and a supplier fire even as hybrid and battery electric sales grew.
Hanwha Investment and Securities forecast that the tariff impact would ease gradually from the second half as base effects set in and North American local production expands.
Thermal management is an area the company entered as a latecomer: brokerages projected thermal-management revenue rising from about KRW 50 billion last year to KRW 100 billion in 2026 and up to KRW 250 billion in 2027, while the company has set a goal of joining the global top three by 2031.
Group level restructuring is also reshaping the landscape, as Hyundai WIA weighs a defense divestment and Hyundai Mobis pursues a sale of its lamp business, with both concentrating investment on robotics, software defined vehicles and electric vehicle thermal management.
Management's stated direction is volume recovery in the second half plus expansion of new businesses. Hyundai WIA said it expects hybrid engine mass production at its Mexican unit to ramp up in the second half and revenue from driveline and thermal-management parts to keep rising.
Mexico is a site where production of the existing Kappa engine stops and the line converts to dedicated 1.6 liter Gamma hybrid engines, targeting roughly 200,000 units a year for Hyundai Motor and Kia plants in North America.
The thermal-management investment plan is specific: about KRW 1.7 trillion over three years through 2028 for integrated thermal management systems and mobility solutions, with capacity coverage rising from 300,000 units in 2026 to 500,000 in 2027 and one million in 2028.
The product roadmap runs from PV5 supply to expanded climate system supply for PV7 and the successor to the Kona in 2027, then supply to an already awarded software defined vehicle program in 2028 alongside bids for next generation dedicated electric vehicle platform volumes.
Production preparation is under way as well, with plans to convert idle machine tool space at the Changwon No. 1 plant into thermal-management lines and relocate the third coolant hub module line to a larger area.
Timing of profitability, however, sits further out: the company expects thermal-management profitability to improve after 2028, when major awarded volumes reach full production and fixed cost pressure eases.
The defense transfer is not yet settled, as the company said in the question and answer session on July 24, 2026 that it is reviewing portfolio reorganization including the Special Products Division from multiple angles but that the work is at an early strategic stage with nothing confirmed.
The shares currently trade well below book value per share, that is, at a discount to net assets.
Earnings based measures tell a different story: the sum of net profit attributable to owners over the last four quarters, from the third quarter of 2025 through the second quarter of 2026, was KRW 70.9 billion, below the KRW 99.0 billion recorded for full year 2025, largely because the third quarter of 2025 net loss falls inside that window.
In short, the asset based view shows a discount while the earnings based view is driven by profit volatility, so the reading depends on which metric one uses. Cash dividends have been paid each year, but in a phase of shrinking profit the stability of dividend capacity also warrants monitoring.
For reference, Daol Investment and Securities said in an April 2026 report that the value of future businesses such as robotics and thermal management, nurtured since 2020, was not sufficiently reflected in the price to book ratio.
By contrast, Asia Today reported in August 2026 that brokerages had moved to cut target prices amid the defense divestment plan and that concerns were raised about a weakening earnings base.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04
Thermal-management revenue rose 305.1 percent year on year in the second quarter of 2026 on higher climate system volumes. The company plans to invest about KRW 1.7 trillion in new businesses through 2028 and lift thermal-management capacity coverage from 300,000 units in 2026 to one million in 2028.
Following PV5, the supply list widens to PV7 and the Kona successor in 2027, pulling forward the revenue recognition window.
The company cited lower Mexican engine revenue and weaker utilization as reasons for its operating profit swing, and industry watchers expected utilization and profitability to improve together once 1.6 liter Gamma hybrid engine production begins.
Management said it expects hybrid engine production at the Mexican unit to ramp up in the second half. With hybrid demand strong in North America, greater local output can also reduce tariff exposure.
The debt-to-equity ratio fell from 102.1 percent in 2022 to 81.2 percent in 2023, 75.7 percent in 2024 and 72.8 percent in 2025, while operating cash flow reached KRW 404.1 billion in 2025.
The company also plans to channel proceeds from the Special Products Division sale into future businesses such as thermal management, factory automation and robotics. In a phase of heavy upfront spending, cash generation and divestment proceeds underpin the continuity of that investment.
The consolidated operating margin slipped from 2.7 percent in 2023 and 2024 to 2.4 percent in 2025, and quarterly operating profit in 2026 hovered around KRW 50 billion. Vehicle components operating profit fell 33.4 percent to KRW 33.1 billion in the second quarter of 2026, a 1.5 percent margin.
Daol Investment and Securities said in an April 2026 report that the operating margin of the auto parts business excluding defense remained only around 2 percent.
Reports put the Special Products Division at about 8 percent of company revenue, roughly KRW 400 billion a year, while another report cited about KRW 340 billion in annual revenue and a share of roughly 4 percent.
Industry voices note that unlike the loss making machine tool unit, defense is a stable high margin business, so a sale raises the risk of an earnings gap for some time.
The union likewise argued that robotics, the intended replacement, is still at a development stage and cannot be expected to generate profit immediately.
The company pointed to United States tariff measures and upfront investment in new businesses as the backdrop to lower profit. Reduced Russian production volumes were also cited as a drag on profitability.
End demand wobbled as well: Hyundai Motor's domestic sales fell 16.4 percent in the second quarter of 2026 due to supply disruption from a supplier fire. Earnings volatility has shown up sharply at the quarterly level before, such as the KRW 16.3 billion net loss attributable to owners in the third quarter of 2025.
The company said its revenue dependence on Hyundai Motor Group is currently about 100 percent and set a medium to long term goal of reducing that to around 50 percent.
Because group production plans and model launches are the volume, single customer events such as strikes, fires or demand slowdowns pass through to results immediately.
Hyundai Motor guided in January 2026 for consolidated revenue growth of 1.0 to 2.0 percent, an operating margin of 6.3 to 7.3 percent and wholesale volume of 4,158,300 units, and delivery against that target frames both the upside and downside for parts volumes.
The company expects fixed cost pressure to ease and break even to become more attainable after 2028, when major awarded volumes enter full production.
Until then costs come first, as in the plan to raise eco friendly parts research spending from KRW 45.9 billion in 2025 to KRW 56.5 billion in 2026 and about KRW 57.8 billion in 2027. If awarded model timelines slip or electrification demand undershoots, the payback point could be pushed out further.
The company is reported to have sent the union a letter seeking cooperation for transferring the Special Products Division to Hyundai Rotem within the year.
At a July 2026 press conference the union opposed the plan, calling it a closed door sale that strips out a profitable business, and a union official said industrial action was possible if its position was not accepted.
With deal structure, price and employment succession terms undisclosed, the possibility of schedule delays and production disruption remains.
Third quarter results and the conference call. Key items are whether the vehicle components operating margin recovers from 1.5 percent in the second quarter of 2026 and whether Mexican hybrid engine output and rising thermal-management revenue actually show up in earnings.
Whether a board resolution or contract filing appears for the defense division transfer, and at what price. Reports say the group is pushing to complete the transfer to Hyundai Rotem within this year, and a confirmed filing would reveal both the size of the earnings gap and the proceeds secured.
The outcome of union negotiations and whether industrial action occurs. Union resistance is flagged as the key variable for completing the sale, so a delayed agreement could affect both the restructuring timeline and Changwon plant operations.
Whether new thermal-management awards from customers outside the group are announced at events such as CES 2027. Progress on the plan to cut group dependence to about 50 percent can only be verified through disclosure of external orders.
The start of climate system production for PV7 and the Kona successor, plus progress on the Changwon No. 1 plant thermal-management line reshuffle. The company plans to supply thermal-management systems to Kia's large purpose built vehicle PV7, due for production in 2027, and to begin producing climate systems for combustion and hybrid vehicles the same year, so any delay in production readiness is worth tracking.
Hyundai WIA shows a classic transition period profile: revenue has climbed to record levels within the KRW 8 trillion range while the operating margin fell to 2.4 percent in 2025.
Second quarter 2026 revenue of KRW 2.354 trillion was a record quarterly level, yet operating profit of KRW 50.4 billion left the margin in the low 2 percent range, and the company attributed this to United States tariffs and upfront investment in thermal-management parts and hybrid engine production.
New business metrics are moving fast, with thermal-management revenue up 305.1 percent year on year in the second quarter of 2026 and an investment plan of about KRW 1.7 trillion through 2028.
At the same time, management sees thermal-management profitability improving only after 2028, implying a stretch where costs run ahead of profit.
Layered on top are the transfer of the defense Special Products Division to Hyundai Rotem targeted within this year and union resistance as a key variable, so whether the earnings base is rebuilt on schedule will reshape the profit profile.
On the balance sheet, the debt-to-equity ratio falling from 102.1 percent in 2022 to 72.8 percent in 2025 and operating cash flow exceeding KRW 400 billion each year support the continuity of that investment.
What matters from here is the speed at which thermal-management and engine volumes convert into margin, along with the restructuring timeline; this report is for information purposes and contains no buy or sell recommendation.
Report written 2026-09-05 · Data as of 2026-09-04
This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.