Hyundai Mo­tor posts 2.2% drop in Q1 profit

The China Post - - WORLD BUSINESS -

South Korea’s top au­tomaker, Hyundai Mo­tor, Thurs­day re­ported its fifth con­sec­u­tive drop in quar­terly earn­ings af­ter a slump in emerg­ing mar­ket cur­ren­cies slashed prof­its in the first three months of the year.

Net profit for the Jan­uaryMarch pe­riod fell 2.2 per­cent to 1.98 tril­lion won (US$1.83 bil­lion), com­pared with 2.03 tril­lion won a year ago, the com­pany said in a state­ment.

Chief fi­nan­cial of­fi­cer Lee Won­hee at­trib­uted the re­sult — which still beat the 1.71 tril­lion won pre­dicted by 23 an­a­lysts sur­veyed by Bloomberg News — to a “dra- matic” weak­en­ing of the Rus­sian and Brazil­ian cur­ren­cies against the Korean won.

“De­mand in th­ese mar­kets also slowed con­sid­er­ably, deal­ing a blow to our mar­gins,” he told a con­fer­ence call.

Hyundai books some 85 per­cent of its sales over­seas, so the strength of the won against other cur­ren­cies can slash the value of the firm’s prof­its at home.

Sales of its Rus­sian and Brazil­ian plants cal­cu­lated in the Korean cur­rency dropped 41.2 per­cent and 11.2 per­cent from a year ago.

Lee said com­pany had been try­ing to “off­set the im­pact of cur­rency swings in the emerg­ing mar­kets by rais­ing prices ... and try­ing to se­cure as much auto com­po­nents lo­cally as pos­si­ble”.

Op­er­at­ing profit tum­bled 18.1 per­cent on-year to 1.59 tril­lion won, while sales dropped 3.3 per­cent to 20.94 tril­lion won, the com­pany said.

But the mar­ket cheered the re­sults, with Hyundai’s shares ris­ing 3.24 per­cent to 175,500 won.

“Hyundai has had a tough quar­ter,” IBK Se­cu­ri­ties an­a­lyst Lee Sang-hyun told Bloomberg. “Still, the com­pany’s sales are ex­pected to re­cover.”

The world’s fifth-largest au­tomaker has also strug­gled to meet shift­ing con­sumer de­mand for sport-util­ity ve­hi­cles, which have been grow­ing in pop­u­lar­ity thanks to their fam­ily im­age, Lee said.

Both do­mes­tic and in­ter­na­tional sales sank dur­ing the quar­ter, with 1.02 mil­lion cars sold abroad, down 3.6 per­cent from a year ear­lier, and do­mes­tic sales sink­ing 3.7 per­cent due to grow­ing com­pe­ti­tion.

Still, Hyundai struck an up­beat note for the sec­ond half, count­ing on the new ver­sion of its Tucson SUV, un­veiled ear­lier this year, to boost prof­its.

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