Hello. This is Michael Yun, Head of Investor Relations team. Welcome, everyone, to Hyundai Motor Company's 2024 Q2 Business Results Conference Call. On behalf of Hyundai Motor Company, I appreciate your time for participating in today's call. Please refer to the presentation HMC 2024 Q2 business results on our IR site. Today's presentation consists of two parts: sales summary and financial summary. For more information, please refer to the Appendix page. Let's start with sales summary. For our 2024 Q2, global wholesale decreased by 0.2% year-on-year to 1,057,168 units while retail sales decreased by 3% year-on-year to 1,033,612 units. In the second quarter, our global wholesale decreased slightly compared to the previous year, but excluding China, our Q2 wholesale increased by 2.2% compared to the previous year, and sales momentum continued in North America. In the domestic market, sales decreased by 9.6% compared to the previous year, driven by the slowdown due to consumer sentiment and weaker EV demand. North America saw a 15.2% increase in sales driven by continued strong sales of high-margin vehicles. The U.S. market witnessed increased sales of SUVs and hybrids, with growth rates of 15.9% and 60.7%, respectively compared to the previous year, lifted by the launch of all-new Santa Fe and all-new Santa Fe Hybrid in the first quarter. Genesis also saw a [ 9 point ] growth, that's an increase in sales, driven by the success of the GV80 facelift launched in March. In Europe, despite strong sales of the KONA and Tucson Hybrid, sales decreased by 5.1% compared to the previous year on a wholesale basis due to weaker demand for EVs. In India, despite a slight slowdown in the second quarter affected by the policy uncertainty and seasonality, sales increased by 0.7% compared to the previous year on a wholesale basis, driven by the strong sales of the Creta facelift released in the first quarter and continued growth in the SUV segment with EXTER and VENUE. Next for sales by model and key segments. Global SUV sales accounted for 64.8% (sic) [ 54.8% ], a 1.4 percentage point increase compared to the previous year, influenced by the global expansion of Santa Fe and the release of the Creta facelift in emerging markets. For eco-friendly vehicle sales, despite a 25% decrease in EVs due to weaker demand, hybrid sales increased by 26% compared to the previous year. Hybrid sales are also increasing globally, including but not limited to Korea, the U.S. and Europe. This is the end of presentation on the sales summary, and now I'll move on to financial summary. This is the income statement. In the second quarter of 2024, revenue increased by 6.6% year-on-year to KRW 45 trillion as well as operating profit increasing by 0.7% year-on-year to KRW 4.2 trillion. In the automotive division, revenue increased by 4.4% year-on-year due to regional mix improvements centered on North America and product mix improvements better than high-margin vehicles. Meanwhile, operating profit, including consolidation adjustments, decreased by 1.6% year-on-year due to increase in SG&A. Despite increased provisioning costs associated with asset growth and rising interest cost, the financial division saw revenue increase by 23.6% year-on-year due to ASP increase resulting from OEM's mix improvement and a continued increase in penetration rate. Operating profit increased by 32.1% year-on-year. Net profit increased by 24.7% year-on-year to KRW 4.2 trillion. Next is revenue and operating income analysis. In terms of revenue, there was a positive volume effect of KRW 713 billion caused by increase in sales. Despite increased incentives, there was a mix effect of KRW 200 billion due to the strong North American sales and ASP increase. Favorable exchange rate environment and increase in financial and others division revenue resulted in a 6.6% increase in total revenues compared to the previous year. As for operating profit, there was a positive FX effect of KRW 400 billion due to a weaker Korean won and a positive volume effect of KRW 153 billion. Also, there was a total mix effect of KRW 95 billion due to expansion of North American sales and increased ASP, which offset increased incentives. As a result, there was a 0.7% increase in operating profit. Our second quarter cost of goods sold ratio recorded a 0.5 percentage point decrease year-on-year to 78.4%. SG&A increased by 17.2% (sic) [ 17.4% ] year-on-year to KRW 5.5 trillion due to increase of labor and provisioning costs. Nonoperating income increased by 70.2% year-on-year to KRW 1.3 trillion mainly due to the [ base ] effect caused by inventory impairment loss in Russia from previous year and an increase in equity net of income. Net profit increased by 24.7% year-on-year to KRW 4.2 trillion, affected by an increase in both the operating and nonoperating income. That concludes the presentation of the second quarter 2024 business results. Thank you.

Next, Senior Vice President Seung Jo Lee, the Head of Planning and Finance Division will assess the company's business results and share information about the dividend payment for the second quarter.

Hello. This is Seung Jo Lee, Vice President of the Planning and Finance Division. Allow me to share our business results for the second quarter of 2024 as well as the outlook for the business [ at hand ] and quarterly dividends. In Q2, driven by strong sales in the U.S., our performance shows slight increase in both the compares to the previous year. The favorable exchange rates and continued improvement in product mix also contributed to the increase in sales and operating profit year-on-year. First, let me report the sales volume. In Q2, wholesale including China amounted to 1,570,000 units, decreasing by 0.2 percentage point year-over-year. Despite a significant decline in EV sales due to weakening demand, we continued to see strong sales of SUVs and hybrids, helping us maintain lower sales. As we mentioned in Q1, our line of eco-friendly vehicles including hybrid and plug-in hybrids, allowed us to adapt effectively to the rapidly changing market and maintain stable sales and profit. While domestic and European markets declined year-on-year, we achieved our business plan targets for the first half of the year. The US market exceeded our business plan, maintaining a strong sales momentum. The Indian market also continues to show steady sales, and we have some major events coming up, such as the IPO of Hyundai Motor India in the second half of the year. Next is operating profit. In the second quarter, we achieved an operating profit of KRW 4.279 trillion with an operating profit margin of 9.5%. Consolidated sales volumes, excluding China, saw a slight increase in our units, and product mix improvement continued with more SUVs and hybrids. The share of SUVs increased by 1.6 percentage points year-on-year to 58.4%, while hybrids recorded an increase for 2.4 percentage points, reaching 11.6%, both contributing to the profitability of the company. Additionally, with cost reduction and foreign exchange rate effects, it maintained a high level of operating profit margin. Next, I will discuss incentives. As you may know, HMC has been focusing on securing profitability and has been improving the business fundamentals over the past few years. Through product enhancements, increasing brand awareness and agency strength and [ flexible, right ] responses, we have consistently gained market share. Although there are external factors that raise concerns about incentive increases in the market recently, we have been closely managing the incentives under our management principle, and we will continue to do so in the future. We're channeling new model launches and continuous product enhancements through [indiscernible] technological development. We will expand our market share while also keeping the incentives at healthy levels. Next, I will discuss the outlook for the second half of the year. Due to the continued high volatility in the market, we do not expect the sales in major markets, except for the U.S., will improve easily. However, the challenging market conditions for this year have already been reflected in our business plans, and we expect a strong performance in the U.S. market and a favorable FX rate to continue in the second half. Therefore, we will continue to focus on profitability and make efforts to fulfill our guidance. At this point, the outlook for the second half of the year is not expected to deviate significantly from the annual guidance, but if necessary, we will provide a revised guidance based on market conditions in the Q3 earnings conference call. Lastly, I will talk about the dividend for Q2. We have decided to maintain the dividend at KRW 2,000, which was raised by KRW 500 in the previous quarter. Going forward, we will continue to make efforts to deliver the promised shareholder return. Moreover, we are planning to hold a 2024 CEO Investor Day at the end of August. We plan to announce our short-term and long-term business strategies and share our financial goals accordingly. Thank you for listening.

Next , Senior Vice President Hyungseok Lee, the Head of Planning and Finance Division of Hyundai Capital, will assess the Q2 results for the finance business.

Hello, I'm Hyungseok Lee, Senior Vice President and Head of Finance of Hyundai Capital. Allow me to report on the earnings of the finance business in the second quarter of 2024 and outlook for the second half of the year. Despite the sluggish economy caused by high inflation and high interest rates in the first half of 2024, Hyundai Capital has not only strengthened its support for automobile sales, but also solidified its market position with unrivaled financial capability and business [indiscernible]. As a result, we have achieved strong sales results. Now let me provide more details on each business entity. First is Hyundai Capital. We strengthened collaboration between sales and finance, and installments and leases grew, increasing total financial assets by 3% year-on-year. By continuing to operate a solid auto financing center portfolio, the proportion of auto finance within the operating assets increased to 83%. As a result, with more revenue from installment of leases, the operating income for the first half of the year increased by 16% year-on-year. Although there was an increase in interest cost due to the sustained high interest rates, the operating profit increased by 28% year-on-year as the provisioning cost increased by 5%. In overseas markets, the profitability of several subsidiaries in the U.K., France, Canada and Brazil improved, resulting in a significant increase of 396% in equity [ investment ] income year-on-year. As a result, net profit for the first half of the year increased by 46% year-on-year. An unstable business environment is expected in the second half of 2024 due to interest rate uncertainty and a sluggish real estate market. However, Hyundai Capital plans to enhance profitability by proactively managing risks and improving asset quality, including keeping the delinquency rate below 1% over a year. The company will also focus on strengthening support for automobile sales. Additionally, in line with the global strategy of the Hyundai Motor Group, Hyundai Capital plans to expand its overseas business, including starting operations in Australia this year and Indonesia next year. Next is Hyundai Capital America or HCA. Backed by solid market demand in the U.S., HCA's penetration rate increased 9 percentage points compared to the same period last year, along with a 10% increase in total financing volume. In addition, with the effect of mix improvement with more high-margin vehicle types, the financial assets increased by 22% year-on-year. With increased installment sales of new cars, HCA's operating income in first half increased by 27% year-on-year. In the U.S., however, a prolonged high interest rate, increased interest cost and provisions, resulting in a 26% increase in operating expenses compared to the same period last year, but operating profit increased by 33%. In the second half of 2024, we expect to see higher market volatility in the U.S. due to interest rate cuts and [ volatility ] issues. To prepare for such uncertainty, HCA is working to ensure financial installments by maintaining a high share of prime customers accounting for 88% of all customers as well as keeping lease assets at 30% or lower to mitigate residual [indiscernible] risk. Furthermore, HCA has issued a total of $8 billion in global bonds over a few occasions in the first half of the year to proactively secure liquidity. Such efforts will enable HCA to continue its role of providing financial support for Hyundai Motor Group's auto sales. This concludes my report on the finance business. Thank you for listening. With that, we will conclude the presentation and take your questions.

[Interpreted] The first question will be presented by Eun Young Yim from Samsung Securities.

[Interpreted] So I have two questions. My first question, you mentioned that for the U.S. market, you'll be keeping an appropriate level of incentives to reach a certain market share. So from HMC's perspective, I'm sure you have already set a budget for this incentive. So what would be your appropriate level of incentive? Because I understand that incentives may have gone up as of May, however, with the recent hybrid coming in, the incentive is not going down. So will this trend continue in the latter half of the year? And what is your target for the U.S. market share for this year? And so my second question is regarding the political situation in the U.S. We have the presidential election coming up. And you have a production plan currently to be operated in the U.S. However, the EV demand in the U.S. is not very high. And if Trump does get elected, he is saying that the incentives through the IRA for EA will be removed completely, and for imports and foreign vehicles, a tariff of 10% is to be planned. So the market is pretty much concerned if such measures are taken into effect. And you mentioned that your EV plant in the U.S., it is able to do mixed production. So how flexible is that mix production? How much of hybrid can be produced and how much percentage of EV can be produced?

[Interpreted] Excuse me. Thank you for your question. Your first question was regarding the incentive level, what is the appropriate level, what is the expected incentive for the U.S. market. So based on EQ standard, we are currently using USD 3,100 for the incentive, which is about a little over 50% year-on-year and a little over 4% compared to the previous quarter. If we compare with the market average, the market average for the incentive is currently USD 3,157, so we are pretty much on average. As for the quarterly basis, however, the market average is up by 8%. And to prepare for such fluctuations, we already have reflected our incentive changes in our business plan, and we are within our expected range. So for the second half, we believe the incentive level will maybe go down, but it won't go up. And the current level is already within the BP range. So it will continue within the business plan range. To answer your second question regarding the presidential election in he U.S. So Biden has decided to step down and Harris will be taking his place, and we believe that it's going to be a very close call between Harris and Trump. So considering that Biden has decided to step down and give his full support for Harris to have the presidency, we believe that he will be concentrating all his resources so that the policies can be executed to defend what Trump is trying to do. And we are certain that he probably wants to protect his achievements, which is IRA as well as the semiconductor incentive. So to prevent those being scrapped, it's most likely that he will be pulling forward the incentive payment timing, but we will keep a close eye on the market to see what's happening. If Trump does win the election, it's most likely that there will be universal tariffs imposed, levied on imports. Maybe IRA will be scrapped and also the eco-friendly policies will be mitigated. And it's most likely that the favorable relationship status for China will also be scrapped. So we are going to take our responses kind of measuring what the pros and cons are. Regarding the universal tariffs, we're not -- it's not decided yet whether this will be reflected and applied to its FTA partners as well. So we have to keep an eye on that. As for the scrapping of IRA, the thing is most of the beneficiaries of IRA are located in states which is very Republican-friendly. So we don't know if that actually will take place. As for the lowering of the eco-friendly regulations and lightening that, if that does happen, it also will be -- it also will be an opportunity for us to save cost. As for the scrapping of IRA in particular, I think it's something that we need to respond to so that we can better be prepared for the EV chasm. However, using one of our biggest strength, which is flexibility in terms of production, we will be reviewing the possibility of increasing the hybrid models. And more -- further details on this will be presented during our CEO Investor Day in late August. To address your last question, which was regarding the ratio in terms of the production flexibility of HMG [indiscernible], further details will be on that will be explained also during our CEO Investor Day in late August. Thank you.

[Interpreted] The next question will be [indiscernible] Yoonchul Shin from Kiwoom Securities.

[Interpreted] My name is Shin Yoonchul of Kiwoom Securities. I have three questions. The first question, you mentioned about a big event in the latter half of this year, the IPO of HMI. So could you give us a rough time line of when this will happen? And what is the background of pursuing the IPO for HMI? My second question is regarding the CDK hacking crisis that happened in June. We did reverse growth in the retail industry because of this. Do you think that the recovery will be seen in July? Or will this still have an impact in your sales? Last question is regarding the increase in operating profit. You said that this KRW 750 billion was due to others fields. So could you give an elaboration on what this others is due to?

[Interpreted] Thank you for your question. So to answer your first question regarding the timing of the IPO, so you understand that we already submitted our DRHP and SEBI, the Indian securities, the agency, is currently reviewing our documents. And we are currently conducting a roadshow around the world promote our IPO. So depending on when SEBI completes this review of our report, I think the time line will be decided. But once that report and the review is complete by SEBI, we will be submitting our RHP, and then subscription can begin and then it can be listed. So it really depends on when SEBI complete the review. However, our internal goal is to get the subsidiary listed within the year. And as a follow-up answer to your question, why India, because we've got a lot of questions regarding that. Because the securities market of India is actually the global #4, it's the 4th biggest and the strongest. And in terms of HMI's capacity, they have a very strong volume as well as P&L. The Indian subsidiary plant is now close to almost 30 years. It's coming into 28th year. And you understand that we've recently acquired our third plant in Pune. So we want to make our second leap in this market, and one of the ways to do that, we believe, was to list the company. I'd like to answer your second question regarding how the CDK hacking affected the retail sales in June and whether if the recovery has been made. To answer your question, in a nutshell, yes, we were also affected by the CDK hacking crisis in June. So to overcome that, we usually have a summer event in August. However, we have pulled this event for to be conducted in July so that the losses made can be overcome. Now to answer your last question, what was the KRW 750 billion increase in the others for operating profit accountable for. First of all, it's our sales provision and also that was affected largely by the FX rate. Compared to the previous quarter, the fixed rate has gone up by KRW 42 trillion, so overall, the effect is about KRW 200 billion worth. And also the interest rate has gone down, so there was a discount affecting that. Also, when we calculate the unit cost for the provisions, we take into consideration the normal inflation as well as the usual rate. And overall, that was accountable for about KRW 100 billion. So it's largely due to the FX rate as well as the adjustment in the interest rates overall. So nothing new, nothing that's kind of extraordinary what caused to this big increase in the operating profit. It's nothing to do with quality cost whatsoever. So just little tweaks regarding the current [indiscernible]. Thank you.

[Interpreted] The next question will be presented by [indiscernible] from JPMorgan Asset Management.

I have two questions. The first one is, do you have any update on the U.S. lawsuit in the dealership group? What should we expect on that? And the second one is in terms of your net cash position for the automotive division as of the second quarter, if you can share that.

Regarding the lawsuit, [indiscernible], we are still looking into that issue. We will definitely update the market if there is any results. And for your second question, the net cash position as of Q2 for the auto business is KRW 15.2 trillion.

[Interpreted] The next question will be presented by Joon Sung Kim from Meritz Securities.

[Interpreted] I also have three questions. First is regarding the material costs. You said that material cost savings was at 74.8%, which is a very surprising number that I haven't seen for years. So what do you think will be the direction regarding material costs for Q3 and also for Q4 as well? Because once you know the spot price, maybe it's possible to also predict what the input cost will be. The second question is regarding the financial business for Q4 as well because the revenue is pretty strong for the financial business compared to the fact that the sales of [indiscernible] is not as strong. So how do you think the financial sector will grow in Q4? And my last question is regarding the shareholder returns. So you said at the beginning of this year that you're continuously trying to improve the value of the new shares. Do you think the details regarding this will be announced, and will it be shared during the CEO Investor Day on the 28th of August? Because it really depends on when we buy the shares. The returns will only be provided once this announcement is made. However, these returns will be based on the profit that was made in the previous year. So we just want to get a hold of when we will be able to get the shareholder returns. And for the next year, will it also be the similar timing at the end of summer? Or will it be like similar to [indiscernible] that's at the beginning of the year?

[Interpreted] Thank you for your questions. So if I could answer your first question, which was regarding the cost rate at 74.8%. I think this is a comparable to various items, for example, the improvement of the mix, the FX rate as well as the drop in resources costs as well as the internal savings efforts that we have made. Whatever the case, COGS is going down. Of course, in the second half of the year, we will continue to improve our mix. And we believe that the raw material costs will continue to go down. However, it won't go as rapidly as it has done in H1. However, it still will be steady. As for the FX rate, we believe the dollar will still stay strong. So all in all, the COGS rate for H2 will not change significantly. Hyundai Capital will be answering the second question.

[Interpreted] So whereas Hyundai Motor Company based the revenue on their annual sales, we tend to accumulate volume that we have acquired to release an installment. So we are more based on mid- to long-term revenue. However, HMC has an increase in sales and revenue for the past 3 years, so although the volume sales might be similar to the previous year, because it has been making constant growth, we believe that we also will be showing growth as well. And the second reason would be due to the interest rate. In the past 2 to 3 years ago, the interest rate has hit rock bottom. However, it has been climbing in the recent years. So most of our revenue is due to the interest rate profit, which also comes through lease. So for us, it's a very big growth driver as well. As for the penetration rate, the U.S. is going up, and it's much higher than Korea as well. So although -- on the other hand, Korea, the external growth might not be as against the U.S. However, the profit rate is pretty much similar to the U.S. market. To answer your third question on our shareholder return policy, yes, it will be mentioned during the CEO Investor Day that has to be held in late August. Not only the short-term policy but also the long-term policy are also being reviewed, so I think the overall direction of our shareholder term policy can be covered during the CID.

[Interpreted] The last question will be presented by [indiscernible] from Merrill Lynch Securities.

[Interpreted] So you said that due to the improvement in your mix, the OP has gone up by KRW 950 billion. And as you can see on Slide 5, the mix is not within the segment. However, it seems that you just increased the proportion of your hybrid compared to the EV, just based on the percentage. That is my conclusion. But you mentioned in the earlier -- this year on the level of profitability, the OP rate that you want to achieve. However, the raw material prices have changed and the inventory situation has changed. So what do you believe the OP rate will be for hybrid compared to the other average segment? And what is the inventory level currently in the U.S.? Because you say that the inventory level is pretty low and there are some issues. And I understand the new plant in the U.S. will soon go into operation. And if you look at the hybrid penetration rate in the U.S. in June, it's pretty flat than expected. So do you think that for Q3 and Q4, the penetration rate for hybrid in the U.S. will be much higher than your original business plan?

[Interpreted] Thank you for your questions. So your first question was regarding the profitability for hybrid. And we have been repeatedly emphasizing that the profitability for hybrid is much bigger and higher than EV, and it's not much different from that of ICE vehicles. We cannot give you the exact figures, however, the hybrid profitability is of a double-digit standard. As for the EV profitability, because of EV, [indiscernible] incentives are going up, meaning that it is lower than our expectation. However, we still are maintaining a low single-digit profitability. You also mentioned about the PP, production plan, for the new plant in the U.S., but that also will be covered during our CEO Investor Day in the latter half -- in late August. And your follow-up question was regarding the penetration rate of hybrid vehicles in the U.S. market. Yes, so if I could answer your last question regarding the penetration rate of hybrid vehicles in the U.S. market. The penetration rate is continuously going up. In Q2 last year, it was at 11%. This year Q2 is at 15%, and we've newly launched the Santa Fe Hybrid. So we believe that the sales will continue to go up in the latter half of the year. You also mentioned about inventory levels. At this time, we believe it's at mid 2-months worth of inventories, and we will be making efforts to maintain this level throughout the latter half of the year. Thank you for your time. Now we would like to conclude the earnings report for HMC 2024 Q2. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]