Hyundai finance may not be the most obvious company to blame for the company’s massive cash flow crisis, but the financial crisis has left Hyundai with a $14 billion hole.
The South Korean automaker has already announced a $3.9 billion plan to fix its cash flow problem, but a massive cash deficit has put it in a difficult spot.
Hyundai will be looking to shore up its cash position this year as its revenue is expected to decline 5% this year.
However, the company has been forced to raise prices for vehicles and services this year due to rising costs and lower demand for its cars and trucks.
It’s not clear how the company plans to close the gap in 2017 and 2018.
Hyundai’s cash position is expected drop 1.8% in 2017, with a net loss of $3 billion.
But its cash shortfall is a lot worse than the $14bn figure quoted by the financial company, and it could end up hitting the company as much as $14.5 billion.
Hyundai has already posted a net income loss of more than $4 billion this year, according to the latest Financial Times report.
This means Hyundai’s cash shortfall would add up to more than half a trillion dollars.
“It’s a problem that Hyundai Finance will have to address.
But, if the company can’t, it’s going to be in a much tougher position,” said Paul Pogue, head of automotive research at FTSE Capital Markets.
Analysts expect Hyundai to need to raise $8 billion in order to balance its cash needs in the next year, or around $13 billion, according the FT.
So while Hyundai might not be able to close its cash hole in the short term, its cash cushion could still be enough to withstand the worst of the recession, analysts say.
Source: Fox Sports