Hyundai Motor Company Investor Presentation July 2015
Table of Contents 1 Ⅰ. Introduction Ⅱ. Corporate Governance 1. Shares & Shareholders 2. Board of Directors 3. Corporate Governance & Communication Committee 4. Communication with Shareholders Ⅲ. Shareholder Return 1. Shareholder Return Policy & Dividend History 2. Interim Dividend & Dividend Increase Plan Appendix. Sustainable Management 1. Philosophy Vision 2. Sustainable Management Creating Shared Value 3. Green Cars & Autonomous Cars
I. Introduction 2 Purpose As a global company, enhance corporate transparency to maximize corporate value Fulfill corporate social responsibility by sharing economic values with stakeholders Business performance( 14) Global sales : 4,962 thousand units (by plant) Sales revenue : 89.3 trillion KRW Operating Margin : 8.5% Investment pattern Focus on shareholder rights and responsibility as well as capital gains Build a long term relationship with stakeholders to maximize future corporate value Improve corporate governance to meet global standard
I. Introduction 3 Value creation Value allocation Growing demand for improving shareholder rights along with company s growth ( HMC only, KRW in billions ) Total value : 43,046 (Revenue) KRW in billions 2012 2013 2014 Sales (by Plants) 4,410,357 4,732,366 4,961,877 Employee : 6,255 (Employee Salary, Training expenses) Revenue (HMC only) 84,470 (43,162) 87,308 (41,691) 89,256 (43,046) Shareholders & Investors : 940 Operating profit (%) 8,441 (10%) 8,315 (9.5%) 7,550 (8.5%) (Dividend payments, Interest expenses) Net Income 9,061 8,993 7,649 EBITDA 10,965 10,867 10,100 Total capital 47,918 56,583 62,651 Suppliers : 26,825 (Purchasing expenses) Global/Local communities : 3,530 (Tax payment and social contribution) Source : Sustainability report
Ⅱ. Corporate Governance 4 Shares & Shareholders Shares held by foreign investors : more than 40% (common stock) Treasury stock : 5.1%, total of 14,684,745 shares (common stock : 5.3%, total of 11,632,277 shares) Shares Shareholders Hyundai Mobis 45,782,023 (20.8%) Preferred Hyundai Mobis Related Parties 11,408,759 (5.2%) Common Others Related Parties Treasury Stock Treasury Stock National Pension Service 11,632,277 (5.3%) 15,914,606 (7.2%) NPS Others 135,538,814 (61.5%) Common Stock 220,276,479 Issued Shares : 285,478,625 Source : Sustainability report, IR Homepage Common stock as of December 31, 2014
Ⅱ. Corporate Governance 5 Board of Directors Comprised of 4 internal directors and 5 external directors as stated in Korean law Sets guidelines for company s management Represents shareholder and stakeholder rights Makes important decisions related to the execution of projects Supervises the work of executives and managements Both Audit Committee and Corporate Governance & Communication Committee consist of external directors to ensure transparency and independence Resolution of the BOD is adopted by majority vote at a meeting in which 50% of the directors are present External Director Candidate Recommendation Committee Recommend candidates for external directors Audit Committee Supervise business operations and financial management Corporate Governance & Communication Committee Protect shareholder rights and enhance communication Enforce transparent and ethical business management Source : Sustainability Report, IR Homepage
Ⅱ. Corporate Governance 6 Internal Directors External Directors Mong-Koo Chung Chairman & CEO Se Bin Oh Lawyer, Dongin Law Dong Kyu Lee Advisor of Kim & Chang Eui Sun Chung Vice Chairman Byung Kook Lee Chairman of e-chon Tax Accounting Corp. Choong Ho Kim President & CEO Sung Il Nam Professor of Economics, Sogang University Gap Han Yoon President & CEO You Jae Yi Professor of Business Administration, Seoul National University Source : IR homepage, Business report
Ⅱ. Corporate Governance 7 Classification Name Position Appointment Date Term Committee Mong-Koo Chung Chairman & CEO 2014-03-14 3 years External Director Recommendation Committee Internal Directors Eui Sun Chung Vice Chairman 2013-03-15 3 years Choong Ho Kim President & CEO 2013-03-15 3 years External Director Recommendation Committee Gap Han Yoon President & CEO 2015-03-13 3 years External Directors Se Bin Oh 2014-03-14 3 years Dong Kyu Lee 2015-03-13 3 years Byung Kook Lee 2015-03-13 3 years Sung Il Nam 2013-03-15 3 years Audit Committee Corporate Governance & Communication Committee External Director Recommendation Committee Audit Committee Corporate Governance & Communication Committee Audit Committee Corporate Governance & Communication Committee Audit Committee External Director Recommendation Committee You Jae Yi 2013-03-15 3 years Corporate Governance & Communication Committee External Director Recommendation Committee Source : IR homepage, Business Report
Ⅱ. Corporate Governance 8 Corporate Governance & Communication Committee Established an independent committee to promote shareholder rights (April 2015) Consists of 4 external directors to ensure transparency and independence Appoint an external director to supervise the management about shareholder rights and communication Stakeholders External Director Secure shareholder rights Board of Directors Corporate Governance & Communication Committee Expand regular communication channels (Non-Deal Road shows and IR events) Responsible for sincere communication with shareholders Participate in activities such as IR events and NDR to gather opinions from shareholders Former ethics committee Represent shareholder rights in major issues such as M&As, major assets purchases Release annual information on its activities through HMC s Sustainability Reports
Ⅱ. Corporate Governance 9 Enhancing Communication with Shareholders Establish an independent committee to enhance our communication channels and measures to serve our investors in better way Establish a Corporate Governance & Communication Committee Release annual information on its activities through various channels including the Sustainability Report Select an independent director to enhance communication Participate in activities such as IR events and NDR to gather opinions from shareholders and reflect their voices into the management Improve communication during AGM Approve financial statements and dividend amount at the AGM (The Korean commercial act allows the BOD to approve) Enhancing Communication Report auditing firm directly through AGM Issue audit report 2 weeks before the AGM providing enough time for shareholders to review
Ⅲ. Shareholder Return 10 Shareholder return policies Completed 1% share buyback of outstanding shares (Nov. 12, 2014 - Feb. 3, 2015) - total volume : 2,854,783 shares / total amount : 0.5 trillion KRW In 2014, payout ratio increase of 54% despite net profit decline of 14.9% year-on-year Dividend History (unit : KRW) Classification 2014 2013 2012 2011 Total Dividend Amount Common 625,933 mil 408,076 mil 397,613 mil 366,222 mil Preferred 191,384 mil 126,333 mil 123,220 mil 113,882 mil Common 3,000 1,950 1,900 1,750 Cash Dividend Per Share (payout ratio) (11%) (6%) (6%) (6%) 2 Preferred 3,100 2,050 2,000 1,850 1, 3 Preferred 3,050 2,000 1,950 1,800 Source : IR homepage, Business report
Ⅲ. Shareholder Return 11 Interim Dividend Introduce the first-ever interim dividend from 1H 2015 to show our commitment to improve dividend policy and enhance credibility Purpose Schedule Increase dividend to maximize June 15 June 30 Mid August Early Sept shareholder value Close the register of Recording date Resolution of BOD Interim dividend Increase shareholder influence shareholders payment Sluggish stock price & low interest rate Taxation on unused corporate income BOD reserves the right to authorize an interim dividend 250,000 200,000 150,000 100,000 Stock price trend Disclose after BOD resolution (within 45 days from recording date) 2009 2010 2011 2012 2013 2014 2015.5
Ⅲ. Shareholder Return 12 Payout Ratio Increase Increase our payout ratio to Korean companies average in the short-term Reach the average of global peers payout ratio in the long-term 11% 7% 6% 6% 6%
Appendix
Appendix_ Philosophy Vision 13 Management Philosophy Vision 2020 Realize the dream of mankind by creating a new future through ingenious thinking and continuously challenging new frontiers Lifetime partner in automobiles and beyond Realization Of Possibilities Lifetime partner Partner for Everyday life Partner for greater happiness Sense of Unlimited Responsibility Love for Humanity To become a trusted lifetime partner for our customers, we will bring a new perspective to automobiles through innovative mobility solutions based on human-centric, eco-friendly technologies and services. Source : Sustainability report
Appendix_ Sustainable Management CSV 14 Social Responsible Management 2020 Long-term CSR Strategy Provide sustainable future value create and share sustainable value with all members of the value-creating chain Social Future Benefits Responsible Management Customers Shareholders Investors Employees Provision of pleasant mobility A company that people can trust A great company to work for Suppliers Local Communities Global Communities Hyundai, as a leading automaker, carries out eco-friendly business activities and actively fulfills its social Being a responsible business partner Growing with our partners Transparent business management responsibilities in order to contribute to a more sustainable society and greater happiness for all. Partnership Sharing with Balance Source : Sustainability report CSR : Corporate Social Responsibility
Appendix_ Sustainable Management CSV 15 Creating Shared Value Create public benefits from every business decision we make Connect company s success with social improvement Hyundai Motor is committed to continuing its growth by ensuring solid business performance and sharing environmental and social values. - Mong-Koo Chung (CEO) Product Responsibility: Improve safety, develop autonomous cars Environmental Management Green cars, recycling of resources Suppliers : Win-win growth system, strengthen global competitiveness Our goal is not simply being a automaker selling a lot of cars but becoming the most beloved company. - Eui Sun Chung (Vice Chairman) Employees : Global human resource development, labor relations management Local Communities: CSR activities in Korea & overseas Source : Sustainability report
Appendix_ Sustainable Management CSV 16 Creating Shared Value activities Top priority issues l Green car development / 2 Autonomous cars Product Responsibility Environmental Management Safety, fuel-efficiency, brand recognition through quality management - The new Genesis received TSP+ by IIHS, HMC ranked 1 st in IQS study by JD Power in 2014 Green car development, Co2 gas emission reduction, design for earth - 2020.2.2. green car roadmap, GHG emissions per unit decreased by 8% in 2014 Suppliers Support for mutual growth, global competitiveness and stable business - Suppliers with overseas operations: 608 companies (1 st tier: 265, 2 nd tier: 343) in 2014 Employees Global HR development, work smart, labor relations - Employees increased by 4.6% (female 8.6%), employ satisfaction increased by 2% in 2014 Local Communities Global CSR activities and support to promote culture and art - Social contribution expenses : 65,201 (Million KRW), Employee volunteers : 23,480 persons Source : Sustainability Report
Appendix_ Top priority issues 17 Green Car Development 2020.22.2. Project Development Roadmap Expand Green Car line-up to 22 models Become the world s 2nd largest manufacturer of eco-friendly cars EV Electric Vehicle Driving range at single charge: (148km 200km) Reduce charging time FCEV Fuel Cell EV Establish FCEV Leading Maker position (mass production of Tucson ix FCEV in 2013) Parts internalization to reduce cost Category Present 2020 Rank 4th 2nd Green cars 7 models 22 models PHEV Plug in HEV HEV Hybrid EV Expand PHEV line-ups (Introduction of Sonata PHEV in 2015) Develop an unique PHEV model Expand PHEV line-ups (Expansion of HEV: small sedan/suv HEV) Improve fuel-efficiency Source : Sustainability report
Appendix_ Top priority issues 18 FCEV Tucson ix FCEV Development Roadmap The world s 1 st mass produced FCEV in 2013 Sold in 15 countries 120 suppliers participated in the development and 95% of components were localized Continuous technology innovation for full commercialization Improvement of charging infrastructure ~2014 Verify fuel cell technology Improve safety features Establish mass production system and supply chain (enable engine at -20 ) Max. distance: 594 km Max. speed: 160 km/h Fuel Efficiency: 30.2km/l Commercial production: Mar 13 ~2020 Expand driving distance and build an effective mass production system (enable engine at -30 ) Share parts with HEVs Intrado (FCEV Concept Car) Source : Sustainability report
Appendix_ Top priority issues 19 Autonomous Cars 1 HMC and other automakers are focusing on autonomous car for mass production HMC plans to invest 2 trillion KRW in related technology for mass production in 2020 5 Level Hierarchy Current stage Level 0 no automation Level 1 functionspecific automation Level 2 combined function automation Level 3 limited self driving automation Level 4 Full self driving automation The driver has overall control Two or more ADAS controls both steering wheel and paddle Fully automated self-driving car Single ADAS controls either steering wheel or paddle Partially-automated driving at highways and automatic parking ADAS :Advanced Driver Assistance System V2X (Vehicle to everything) Source : Sustainability Report, KARI, NHTSA Genesis The Empty Car Convoy Plan to be equipped in new models (HDA, Equus, 4Q 2015)
Appendix_ Top priority issues 20 Autonomous Cars 2 HMC already obtained global level of ADAS technologies such as ASCC, LKAS, AEB - Some technologies have been already applied to existing models - HDA, which allows partially automated driving at highways, will be equipped in new models from 2015 From 2020, HMC plans to commercialize highly automated cars ADAS (Advanced Driver Assistance System) LKAS Lane Keeping Assist System Automatically correct steering when deviate HDA Highway Driving Assist (2H 2015) Partially-automated driving at highways AEB Autonomous Emergency Braking Automatically applies brakes to avoid collision TJA Traffic Jam Assist (in 2020) Partially-automated driving in cities BSD Blind Spot Detection Detects other vehicles coming up to side ASCC SPAS Advanced Smart Cruise Control Automatically maintain distance with vehicle ahead Smart Parking Assist System Parallel or reverse parking automatically AEB BSD SPAS ASCC LKAS Source : Sustainability report, KARI, NHTSA
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