이 기사는 2022년 04월 27일 07:40 thebell 에 표출된 기사입니다.

South Korean automaker Hyundai Motor has created a new team to respond to rising raw material prices amid increased uncertainty surrounding raw material supply.

The company launched a team dedicated to managing the procurement of key raw materials earlier this year and developed a system that calculates the impact of changes in raw material prices on its profitability, Seo Gang-hyun, executive vice president and finance head of Hyundai Motor said during an investor call on Monday.

The move is viewed as a sign of the company’s intention to directly manage the procurement of raw materials instead of just relying on its suppliers.

Raw material prices have spiked in recent months as demand from industries rises while supply remains unstable. In particular, supply chain disruption is expected to continue for some time due to a prolonged war in Ukraine and China’s zero-Covid strategy, potentially further pushing up prices.

Hyundai Motor said it plans to work with its suppliers to buy more of battery raw materials in advance, with a target of carrying at least a three-month stock of battery cells and cathode materials.

“We are working to secure supply of key raw materials and plan to increase the use of derivatives as well,” said Koo Zayong Koo, senior vice president and head of investor relations at Hyundai Motor.

The company has seen little direct impact from volatility in raw material prices because it takes three to twelve months until raw materials purchased by its suppliers are used in its vehicles and they are recognized as revenue, meaning the volatility is smoothed out a bit over that period, Hyundai Motor said.

Hyundai Motor reported 1.9 trillion won ($1.5 billion) in operating profit, up 16.4% year-over-year, on revenue of 30.2 trillion won in the first quarter. Its operating profit margin stood at 6.37%, which was within the company’s target range of 5.5%-6.5%.

“Our comprehensive efforts to respond to rising raw material prices and fundamental changes to our supply chain management strategy helped minimize the impact of costs on our first-quarter earnings,” an official at Hyundai Motor said. (Reporting by Su-jin Yoo)