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Investing.com -- HD Hyundai (OTC:HYMTF) Electric (HDHE) reported weaker-than-expected second-quarter 2025 results, primarily due to inventory timing issues at its Atlanta subsidiary rather than demand weakness.
The company’s U.S. subsidiaries saw revenue decline 59% quarter-over-quarter and 42% year-over-year as finished goods from Alabama and Ulsan plants awaited customer delivery. Management emphasized this was a temporary timing issue and expects deliveries to normalize in the third and fourth quarters.
Despite the revenue shortfall, HDHE reaffirmed its full-year revenue target of 3.89 trillion won and indicated that total orders of $3.82 billion are achievable with potential upside.
North America now accounts for 64% of the company’s backlog. While U.S. revenue fell 18% quarter-over-quarter due to delivery timing, order inflow remains strong, particularly from utilities and nuclear-related infrastructure.
The company’s second-quarter operating profit margin benefited from a 10.6 billion won reversal of previously reserved U.S. anti-dumping duties, boosting margins by approximately 120 basis points. Even without this one-off benefit, margins would have remained high at around 22%.
HDHE also expensed about 20 billion won in reciprocal tariffs during the quarter, with negotiations underway for potential recovery in the second half of 2025, which could provide additional margin upside.
On a standalone parent basis, operating profit margin reached 27.7% in the second quarter, up from 25% in the first quarter, with a first-half average of 26.4%. Management expects margin expansion to continue into the second half of 2025 as deliveries normalize and cost pass-through improves.
According to Morgan Stanley (NYSE:MS), "Despite a weaker 2Q headline, HDHE remains on track to outperform its full-year revenue and order targets, supported by strong North America backlog, recovering domestic demand, and rising European contribution."
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