The Korea Herald


Hyundai Motor's Q1 net drops 2.2 pct on strong won

By KH디지털2

Published : April 23, 2015 - 14:25

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Hyundai Motor Co., South Korea's largest automaker, said Thursday its first-quarter net profit dropped 2.2 percent from a year earlier, affected by the strong local currency that hurts its sales in emerging markets.

Net profit came to 1.98 trillion won ($1.83 billion) during the January-March period, compared with 2.03 trillion won a year earlier, the company said in a regulatory filing.

The first-quarter operating profit also dropped 18.1 percent on-year to 1.59 trillion won over the cited period, while sales shrank 3.3 percent to 20.94 trillion won, the company said.

The first-quarter net was well above the median estimate of 1.79 trillion won in a poll of 21 brokerages conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency. Operating profit, however, was below the consensus estimated at 1.71 trillion won.

Hyundai Motor's shares rose 3.24 percent to close at 175,500 won on the Seoul bourse.

"Unfavorable currency conditions in emerging markets drove up costs at local plants and led to a decline in demand in those markets as well," said Lee Won-hee, Hyundai Motor's chief financial officer, during a conference call after its earnings results were released.

Hyundai Motor said it sold 1,182,834 units during the first quarter, down 3.6 percent from a year earlier. Its exports fell 3.6 percent on-year to 1,028,032 units, while domestic sales also shrank 3.7 percent to 154,802 units.

Emerging market sales declined with shipments bound for Russia, in particular, dropping 11.6 percent on-year during the first quarter, the company said.

Sales in China and India also dropped 1.5 percent and 1 percent, respectively, while those in Turkey surged 31.2 percent, the company added.

The company cited a lack of its production capacity for sport utility vehicles as another factor behind the "lower-than-expected" earnings results at a time when demand for those cars is on the rise.

"We are in talks on how to adjust production for each line and how to increase the overall (SUV) production. Details could be unveiled in the second half of this year," Lee said.

He said that Hyundai Motor is actively considering building an additional plant in the U.S. in order to meet growing demand there but added that nothing has yet been decided on the matter.

Hyundai currently runs a factory in Alabama that can churn out around 300,000 cars annually.

"We are actively carrying out a comprehensive review (of business plans in the U.S.) not just for the factory production but also which vehicles, including SUV models, should be introduced there," he said.

On outlook for the months to come, Lee said that things could improve starting in the second quarter as he expects sales of new cars, including the all-new Tucson SUV, in global markets to post steady growth and currency market conditions in emerging markets, including Russia, to stabilize. (Yonhap)