Hyundai Motor Company is on track to achieve its largest-ever shareholder returns this year, driven by proceeds from its recent initial public offering in India. The automaker’s actions are part of an ambitious strategy led by Executive Chairman Chung Euisun to share the rewards of Hyundai’s rapid global growth more directly with investors.

Backing promises with action

Just three months after announcing a plan to buy back and partially retire 4 trillion won worth of its own shares over three years, Hyundai Motor Company surprised the market by spending 1 trillion won -- one quarter of the entire planned buyback -- in a single move last week. This funding came largely from the company’s Indian IPO, showing investors that the company is turning its promises into action, fast.

Already this year, Hyundai Motor Company has paid out 1.58 trillion won in dividends -- 6,000 won per share -- and has now added a 1 trillion won share buyback. That brings total returns so far to 2.58 trillion won. Even if the end-of-year dividend is modest, total shareholder returns will exceed 3 trillion won, breaking the company’s previous record. Some analysts, like Hana Securities researcher Song Sun-jae, believe that total shareholder returns this year could reach about forty percent of the company’s net income, thanks to this “special” payout.

These moves reflect a broader policy shift. Starting next year, Hyundai Motor Company will formally adopt a “total shareholder return” approach, aiming to return at least thirty-five percent of its net profits through dividends and buybacks. In addition, the company has committed to repurchasing about 4 trillion won in shares by 2027.

Profits fuel policy

Hyundai Motor’s growing commitment to shareholder returns comes on the back of stellar financial performance. Since Chung took the top seat in late 2020, the company has seen both sales and profits climb to record levels. By 2022, Hyundai-Kia had become the world’s third-largest automaker, an achievement it maintained in 2023, surpassing established competitors such as Nissan and Honda. In the US, it achieved a 10 percent market share in the electric vehicle sector, second only to Tesla.

Financially, Hyundai Motor is on track to post sales of 170 trillion won this year, up from 117 trillion won in 2021. Operating profit is expected to exceed 15 trillion won -- more than double its 2021 figure. This financial growth has allowed the company to steadily increase dividends, from 4,000 won per share in 2020 to 11,400 won last year.

While Hyundai’s aggressive shareholder return strategy has been well-received, the company is careful to maintain a balance between rewarding investors and reinvesting for future growth. “Not all of the proceeds from the Indian IPO will be returned to shareholders,” said a Hyundai Motor official. “A significant portion will be reinvested locally.” The company has also emphasized that the final year-end dividend will depend on overall annual earnings and a decision by its board of directors.