Ladies and gentlemen, thank you for attending this conference call. We will now begin Hyundai Motor Company's Business Results Conference Call for the First Quarter of 2025. Once again, the presentation materials can be downloaded from the Financial Supervisory Services Electronic Disclosure system dart.fss.or.kr or from our IR website at www.hyundai.com. Joining us at this conference call are Executive Vice President, Seung Jo Lee; the Head of Planning and Finance Division; Executive Vice President, Zayong Koo, the Head of IR Division; Vice President, Jungwon Kim of Finance and Accounting Subdivision; Michael Yun, Head of IR Group; and Senior Vice President, Chang Seok Lee; Head of Planning and Finance Division of Hyundai Capital. We will first have Hyundai Motor Company's presentation on the business results, followed by a Q&A session with the attending investors. [Operator Instructions] Now we will proceed with the presentation by Michael Yun, the Head of IR Group at Hyundai Motor Company.

Hello, this is Michael Yun, the Head of IR Group. Welcome to Hyundai Motor Company's 2025 Q1 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 titled HMC 2025 Q1 Business Results on our IR website. This presentation includes sales performance and profit analysis. And for a summary of quarterly cash flow statement and detailed regional sales breakdowns, please refer to the appendix. First, the sales performance. For your reference, starting from this quarter, we have slightly adjusted the scope of disclosed sales performance data, taking into consideration factors such as the increased significance of the U.S. market and our major business regions. In Q1 of 2025, the global wholesales recorded 1,001,120 units, down 0.6% year-over-year, while global retail sales totaled 956,354 units, an increase of 1.0% year-over-year. Although the global wholesale slightly declined year-over-year, wholesale excluding China rose by 1.3% year-over-year. In the U.S. market, the market continued its steady sales momentum, driven by hybrid models, showing a year-over-year increase of 1.1%. Notably, retail sales experienced robust growth, rising 10.8% year-over-year. In particular, hybrid model sales increased 43.0% year-over-year, led by sales expansion of SUVs such as the Tucson and the Santa Fe. Additionally, with emerging discussions of potential changes in EV-related policies, EV sales also grew 16.8% year-over-year. In the European market, the total sales volume decreased by 3.8% year-over-year, amid weakening industry demand caused by a slowdown in economic recovery. However, the planned mix shift towards eco-friendly vehicles is progressing steadily, as evidenced by a 61.1% increase in EV sales and a 24.7% increase in hybrid vehicle sales, in line with efforts to meet fuel efficiency regulations. In the domestic market, sales increased by 4.0% year-over-year, primarily due to the base effect from the previous year's shutdown of conversion work at the Ulsan plant. In the Indian market, SUV sales rose slightly by 1.0% compared to the previous year. However, due to intensified competition, wholesale sales for Q1 declined by 4.2% year-over-year. Next up is sales by vehicle type. Starting this quarter, to easily identify quarterly sales trends of key segments, we will share data from the current quarter along with the previous four quarters. Global SUV sales, including Genesis, totaled 576,385 units, accounting for 57.6% of total sales, while global passenger car sales reached 374,673 units, making up 37.4%. Amid emerging concerns about a potential slowdown in the real economy, consumer preferences for affordability have strengthened compared to the previous year. Eco-friendly vehicle sales increased by 38.4% due to a mix shift to respond to the fuel efficiency and strong sales in the U.S. High EV sales growth rate in the U.S. and European markets led to a year-over-year 40.4% increase, and hybrid sales also increased by 40.4% year-over-year, driven by hybrid SUV sales growth. This is the end of sales summary, and now I'll move on to the financial summary. This page summarizes our income statement. Consolidated revenue increased by 9.2% year-over-year to KRW 44.4 trillion, and operating income increased by 2.1% year-over-year to KRW 3.6 trillion. The Automotive division's revenue increased by 11.2% year-over-year, due to favorable FX environment and expansion in high value segments especially hybrid models or HEV. The operating profit decreased, by 3.5% year-over-year, with a hike in incentive levels in the U.S. and European market and selling expenses. Revenue from the Finance division increased by 11.2% year-over-year due to continued growth in the U.S. market penetration rate and [asset size]. Operating profit increased by 34.3%. Net income increased by 0.2% year-over-year to KRW 3.8 trillion. Next is quarterly revenue and operating income analysis. For revenue, KRW 2.6 trillion occurred from favorable FX rate and global sales expansion, excluding China, yielding a volume effect of KRW 72.6 billion. Despite a higher incentive spending, hybrid model sales growth led to a positive mix effect of KRW 868.9 billion. Additionally, the Finance division revenue increased, contributing to the overall revenue growth of 9.2% over a year. Regarding operating profit, a favorable FX rate resulted in positive FX effect of KRW 600.6 billion. Rising incentive levels led to the net mix effect to result in negative KRW 416 billion. The continuous growth in the Finance division contributed to KRW 14.6 billion and the operating profit increased by 2.1% year-over-year. Our first quarter cost of goods sold ratio recorded 79.8%, a 0.5 percentage point increase year-over-year. SG&A recorded KRW 5.3 trillion, which is a 9.8% increase compared to last year due to the increase of our new year marketing related expenses and R&D. Finally, our net profit increased 0.2% to KRW 3.4 trillion. That concludes the end of the presentation of the 2025 Q1 business results. Next, Executive Vice President Seung Jo Lee, the Head of Planning and Finance Division will assess the company's business results in Q1.

Good afternoon. This is Executive Vice President Seung Jo Lee, the Head of Planning and Finance Division. I will now present our Q1 2025 business performance, U.S. tariff impact and recovery plans, as well as Q1 dividend and treasury stock cancellation. In Q1 2025, despite industry average incentives rising in both the Europe and U.S. markets, and our investments in new vehicles and future technology have expanded, with all-time high sales of hybrid and strong sales in North America, in addition to a favorable FX rate effect compared to the same period last year, so we posted a record high first quarter operating profit of KRW 3.6 trillion and an 8.2% operating profit margin, outperforming market consensus and annual guidance for OPM. Next, I would like to address the impact of U.S. tariff on our business performance and our countermeasures. As an individual corporate entity, our focus will be on mitigating the effects through profitability recovery initiatives. As there remains a high degree of uncertainty regarding some specific elements in the tariff impact calculation, it is too early to disclose specific figures. Once uncertainty clears somewhat, we will connect with the market once again. Now, I will elaborate on our countermeasures in response to the impact of the U.S. tariff policy. Instead of relying on external variables, we intend to leverage our internal capabilities to drive a structured response. So, we are going to use this as a momentum to change our fundamentals. We have launched U.S. Tariff Response TFT as a specific countermeasure to establish a company-wide response system, and we will optimize our production and sales strategy by region and model type to leverage our core strength. And we are preparing to pursue a CapEx and OpEx contingency plan based on company-wide and region-wide investment by priority and efficiency. Moreover, we will conduct a cost reduction via production efficiency improvement at our newly opened HMGMA and original Alabama plant. We will also implement mid to long-term U.S. localization strategies, which include parts sourcing and logistics. Finally, we will continue our efforts to recover profitability by responding to supply and demand fluctuation by implementing flexible and efficient pricing strategy and incentive policy. By actively pursuing these company-wide recovery plans, we believe we can meet the annual guidance announced last January, and therefore will maintain our guidance for sales growth of 3% to 4% and operating profit margin of 7% to 8%. Next, let me share quarterly dividend for Q1. In August 2024, we announced a value-up program where we have first introduced a minimum dividend of KRW 10,000 per share and a quarterly dividend of KRW 2,500 starting from 2025. In line with the value-up program, we will pay a quarterly dividend of KRW 2,500 for both common and preferred stocks this quarter. Additionally, we have implemented record date for year-end dividend in 2024 to improve dividend transparency for our investors. Consistently, improvement of quarterly dividend system has been approved at the 57th General Shareholder’s Meeting this March so that record dates for quarterly dividends are determined by the Board resolution. Accordingly, the record date for quarterly dividend for Q1 has been determined as May 30th by the Board instead of the last day of March. Dividend payment date will be June 30th. Now, let me share our plans for cancellation of treasury stock. First, we plan to implement mid- to long-term shareholder return policy previously announced in April 2023. We have promised to cancel 1% of the issued stock annually for the three years starting from 2024 and this year's cancellation is the second round. In addition to that, we will cancel treasury stock which has been bought back from last November to this February for shareholder value enhancement. This accounts for a cancellation of 1.2% of issued stock. Total number of treasury stock canceling accounts for roughly KRW 1.1 trillion. Amid expanding uncertainties and rapidly changing auto environment, we will continue our efforts to implement shareholder return policy for our investors and shareholders as we have promised in the value-up program. In times of past challenges such as COVID-19 pandemic and the semiconductor shortage, we have successfully optimized profitability and improved our fundamentals by responding swiftly and flexibly to changes. Likewise, regarding the tariff impact, our management team led by President Jose Munoz along with our group will closely monitor and analyze market conditions and risk to recover profits and overturn these challenges and overturn the challenges and turn the challenges into opportunities. We sincerely appreciate the continued support of our shareholders and investors. Thank you for your attention. Next, Senior Vice President Chang Seok Lee, the Head of Planning and Finance Division of Hyundai Capital will assess the Q1 results for the finance business and the business outlook for Q2.

Hello, this is Chang Seok Lee from the Planning and Finance Division of Hyundai Capital. Allow me to share the finance business's performance for the first quarter of 2025 and our outlook for the first half of the year. Despite market uncertainties caused by rapidly changing domestic and global politics in Q1, Hyundai Capital continues stable business operations based on a strong captive asset portfolio while further strengthening collaboration with the group. Although U.S. government tariff policy raised global stock market volatility significantly, the bond market remained relatively stable and in Q1, Hyundai Capital successfully issued $500 million in global bonds and HCA $5 billion, continuing active funding activities both domestically and internationally. Next, I'll go over the details for each company. First is Hyundai Capital. Based on strong credit ratings and competitive funding capabilities, we continue to support the group's auto sales financing, maintaining the proportion of auto finance at 83% of total product assets in Q1. With the launch of various financial products specific for eco-friendly models in line with the group's recent electrification strategy, lease assets grew by 3.9% year-over-year. With increasing leasing-based revenue, operating profit for Q1, excluding derivatives effects, rose by 3.8% year-on-year. Due to the minimization of funding costs based on a diversified borrowing portfolio, interest expenses decreased by 3.2% year-on-year. However, despite a delinquency rate in the 0% range, the worsening soundness of the financial sector led to an increase in provisioning for bad debts. Additionally, higher leasing costs drove up operating expenses by 6.4% year-over-year, resulting in a 17.6% decrease in operating profits year-on-year. However, with improved profits from overseas subsidiaries in Europe, including Germany, the UK and France, equity method income increased by 15.9% year-on-year, resulting in pre-tax profits growing by 3.1% and net income increasing by 8.4% year-on-year. We expect to see high volatility in both domestic and global markets in Q2 of 2025. Hyundai Capital will focus not only on expanding its size, but also on enhancing profitability through a cost efficiency and minimize risk through stable business operations and soundness management centered on high-quality auto financing. Moreover, Hyundai Capital Australia, which recently received an A- credit rating from the global credit rating agency S&P, will expand its operations. In the second half of the year, we will begin operations of our Indonesian subsidiary, further strengthening our position as a leader in the global auto finance market. Next is Hyundai Capital America or HCA. In QA, with strong vehicle sales across the group, the acquisition rate rose to the 70% range, leading to an expansion of asset size across the entire portfolio. In particular, with a significant increase in leasing for eco-friendly vehicles, lease assets grew by 41.6% year-on-year and total product assets grew by 19.9% year-on-year. Not only did the asset size increase, but the profitability of both installment and lease products also improved, leading to a 9% increase in operating income year-on-year. Due to increased borrowings for business expansion, interest expenses rose, but by managing the proportion of prime customers at 88% and minimizing the increase in provisioning for bad debts, operating profit increased by 66.6% and net income grew by 63.5% year-on-year. In Q2, the U.S. market is expected to remain unstable, depending on the scope and impact of the tariff policies. However, based on its strong customer portfolio, HCA is reducing credit risk by maintaining a low delinquency rate and has secured liquidity through large-scale bond issuance in Q1 to proactively prepare for various scenarios. As market volatility is higher than ever, we will closely monitor the market conditions in the first half of the year and minimize uncertainties through effective risk management and continue to provide stable financing support for the group's auto sales. And that's the end of the finance business presentation. Thank you for listening. With that, we will conclude the presentation and take your questions. Please limit your questions to two per person. Thank you.

[Foreign Language] [Interpreted] Now Q&A session will begin. [Operator Instructions] The first question will be provided by Chang Ho Kim from Korea Investment and Securities. Please go ahead with your question.

[Foreign Language] [Interpreted] Thank you for giving me the opportunity to ask questions. So I have two questions for you. First is regarding tariffs, it's becoming a big issue right now. So I know you gave us a basic explanation on how it's going to affect the business, but could you elaborate a bit more on how it’s going to impact the profit and also what is your response in the long term? Furthermore, with the current FX rate, it's pretty high, so I think it is possible to recover some of the losses through the FX rate. But how sensitive and how reliable are you on the FX rate? So that's my first question. My second one is regarding the shareholder return policy, you did give us your plan to do more [transformation] audits of your stock, but will your TSR of 35% not change? Will this still remain as the same? And do you also have -- I'm sure you also have additional transformation plans that will take place in the latter half of this year?

[Foreign Language] [Interpreted] Thank you for your question. I'll answer your first question. So there are so many uncertainties regarding tariffs. There are so many changes going on even as of now. So as we have mentioned, it's very difficult to give a clear number at this point in time. So when these uncertainties are somewhat gone, we will come back with a clear answer. However regarding the mid- to long-term strategy, if I could touch a bit more on that? To respond to the policies and the tariff regulations that the U.S. government is currently announcing and to minimize any of the impact that has on our financial business, we have in mid-March launched a U.S. Tariff Response TFT. So this TFT will look at not only the short-term impact, but also the mid- to long-term impact that the tariff will have on our business. The tariff not only impacts finished cars, but also auto parts, as well as steel and aluminum. So we need to take a comprehensive report in terms of the supply chain. Therefore, the TFT will look into not only the car business itself, but also the sourcing logistics as well, and how we can use localized parts and local logistics as well. And as a result, we will look into how we can further make the production of our HMMA and HGMA more efficient. As for identifying the localized sourcing for the parts, we have listed out all the KD parts for the sub-parts as well as the end-use parts, and we have prioritized which of the suppliers are the best in terms of the local suppliers so that we can identify the best suppliers in the U.S. market. Furthermore, we have sent a specialist already to the U.S. so they can take a further look into the suppliers, because when we want to change suppliers, it's not just looking at the supplier itself, it really takes time to look at how the development is made, what the quality is, what are the functions of these parts. However, to save time, we have come up with a certain list of items that has to go on a fast track so that we can pull forward and minimize the impact of tariff that has on our business. Furthermore, as we have announced in mid-March regarding our investment in the U.S., we have made announcement that time so that we can increase the production capacity of HGMA, the Metaplant. So we believe that this investment will further help in minimize the impact of the tariff. And also to ensure efficiency of the U.S. production we will use the knowhow that we have gained with our Alabama plant to work and strengthen competitive parts as well as achieving optimization of logistics and also achieving efficiency of the logistics. And all of this knowhow that have been built up in Alabama will be shared and communicated to HGMA America [inaudible]. So overall to achieve production efficiency in the industry it is also very important that the suppliers have a on-time supplying schedule and also quality as well. So all of this will also be surveyed and inspected. As for our sales policy, we will keep an eye on what the vendors are doing and adjust our selling price and incentives accordingly. However, for the fundamentals of our production, we will try to optimize the supply and sales plan by using the regions that we have as well as the segments that we have. Some of these policies are already rolled out. As for the U.S. market in particular, as Mr. Munoz has announced, we will be freezing the price until 2nd of June. After that, we will let the market decide on what the pricing is going to be. Whatever the case, we are going to go with a flexible pricing strategy. As for the incentive, again, we will be monitoring what the competitors are doing, what the demand is, as well as what the supply of the competitors is going to be. So, it's going to be very flexible and also timely at the same time. As for the strategy regarding the production sites and models, we will try to minimize the impact of tariffs as possible. And one of the things that we are doing is the Tucson that is to be exported to the U.S. that is produced in Kia Mexico plant will now be produced in HMMA. And the models that are produced in HMMA to be exported in Canada will be now relocated to Mexico and exported to Canada. For vehicles that are produced in Korea and exported to the U.S., we will try to see which of the models can be transferred so that we can keep the profitability as well as the market share. Now, in the short term, we are almost completed in making plans on how to use the investment as well as the current account. Of course, for the key businesses, investment will be maintained. However, any unnecessary investments as well as those investments that have low marketing effect will be eliminated as much as possible. As for the investment, that will be continued for future businesses and also, it still will be kept to an efficient level. But we will also try to be as flexible as possible in terms of our investment. With such contingency plan, we will try to minimize the impact of the tariff and also respond to mid- to long-term business plan as well so that we can secure our business competitiveness as much as possible. Just a little more on what efforts we are making to minimize the tariff impact. We have actually shipped a lot of the parts that is necessary for the finished vehicle. So, at this time, we have 3.1 months worth of inventory already shipped over so that the finished car can be made. As for the parts itself, we have a longer month inventory as well. You also mentioned regarding how sensitive we are in terms of the FX rates. So, I am afraid we are not able to answer that question as of yet with an accurate number. But I am sure you are aware that the amount is not that small for us. So, I think it is not an appropriate time for us to mention this now. But when the time comes, we will also share this with you soon. Moving on to your second question, whether we will increase the TSR by 35%. Yes, as we had announced in last year's CID, the quarterly dividend of KRW 2,500 and a minimum dividend payout of KRW 10,000 as well as TSR of 35% will be kept. We will be keeping that promise. How that will be realized, we will find a time when it is most appropriate to communicate with our shareholders and the market as well. Thank you. Next question, please.

[Foreign Language] [Interpreted] The following question will be presented by [Yoon Jung Cho] from UBS. Please go ahead with your question.

[Foreign Language] [Interpreted] Thank you very much for the opportunity. I have two questions for you today. As the uncertainties remain very high, I can see how the business management is not easy for you. However, are there any updates that you could share with us in terms of the GM partnership? And I heard about sharing capacity possibly with GM. Can you share any details of that? And my second question is about the shareholder return that you briefly touched upon. The TSR target has already been set and the dividend cancellation is receiving a lot of interest. But when you calculate this, are you going to include the existing share that you already have purchased or are you thinking about just cancelling the newly purchased share? And please give us more direction about your buyback plan going forward.

[Foreign Language] [Interpreted] To your first question about the update on the current partnership with GM, yes, discussions are ongoing on various fronts and we're thinking about a lot of opportunities. However, and we have some, also in connection with the tariff policy as well but I would say that it is not appropriate to share any details at this moment. But I can say with certainty that the partnership and discussions are ongoing and both companies are working very hard to make efforts to create a great outcome going forward. And I expect to be able to share more details with you in a foreseeable future. And your second question was about the calculation of the TSR. And the short answer to that is that yes, the existing shares that we've previously held will be included as we have already announced. And also, we can cancel some of the new acquired shares as well to the extend the shareholder value to meet the commitment to the TSR. And you also asked about how we're going to return the value to our shareholders. As I mentioned when I answered your first question, we are looking at this in line with our response to the tariff policy. So, and that plan is almost close to finishing. So, we are going to find ways to meet the target of TSR of 35% or higher and then we're going to be sharing the results with the market very soon.

[Foreign Language] [Interpreted] Due to time constraint, we'll now take the last question. The last question will be presented by Ji-Woong Yoo from Daol Investment & Securities. Please go ahead with your question.

[Foreign Language] [Interpreted] Thank you. Hi, I'm Ji-Woong from Daol Securities. I also have two questions. The first is regarding the Metaplant. So this year, you announced production plans of 500,000 units. And how is this different from last year? Last year, I understand that the capacity was 300,000. So, how is this different from this year? And how is this 500,000 being composed of? What are the models that are composing of this 500,000 units. And when Metaplant and Alabama plant start producing EVs? And because you announced plans to produce EVs there. And we also have the Ulsan EV plant that is going to be completed next year in Korea. And there also will be production plans for EVs as well. And, I understand the Korean EV plant, the production capacity is also about 300,000 units. So, overall your production capacity will be about 500,000 units to 600,000 units, which could lead to overproduction issues. What are your thoughts on this possible outcome of overproduction of EVs? And my second question is regarding Russia. I understand that you have the sales number for March. So, what is the most recent figure and the business status of the Russian market? Thank you.

[Foreign Language] [Interpreted] Thank you. So to answer your first question, yes, last year we announced the production capacity to be 200,000 and the reason that -- one of the reasons but we added now 200,000 units more to this capacity. And the original plan was to actually announce the 200,000 units production increase depending on the situation, what the environment of the business was. And we decided to pull this plan forward, actually and that’s why we announced our plans to increase the capacity out by 200,000 so that we have a total production capacity of 500,000. As you understand, we will also be inputting hybrid production in HGMA as of next year. With the increased capacity, we will not only be producing EVs but also hybrids as well so that we can keep an optimal level of operation and production rate of the plant as well. As for your question regarding the Ulsan EV, you are very concerned on whether there is going to be over supply of EVs. So we are looking into various possibilities as well whether we will be collecting all the EV productions, globally to be produced in Ulsan or to add hybrid production into the Ulsan plant. But right now it’s not possible to communicate our concrete plan with the market as of yet because of internal reasons. And frankly speaking, we don’t have a clear plan on how we are going to -- what our plant for the Ulsan plant is yet. But we will find time to once the time is set so that we can communicate with this with the market. And as to your final question regarding Russia, retail sales in Russia is not actually the Russian market itself but actually the Russian region and the surrounding areas. At this time, we don’t have any sales in the Russian market. The only business that we have left there is service and some after-service businesses. The sales that have been recorded for the area is mostly from Kazakhstan, other than that, we don't have any business going or sales that is recorded from the Russian market. The business that is left in the Russian market, for example, the after-sales service, that also is conducted through the dealership. The Hyundai Motor Company is not conducting any business in Russia right now.

That ends the earnings call for HMC for Q1 2025. Thank you for listening.