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Net profit of Hyundai Motor drops 10.8% in Q1

Hyundai Motor, the nation’s top automaker, said Tuesday that its first-quarter net profit dropped 10.8 percent from a year earlier, affected by weak demand from emerging markets.

In a regulatory filing, the automaker reported a net profit of 1.77 trillion won ($1.54 billion) for the January-March period, down from a profit of 1.98 trillion won tallied a year earlier.

Hyundai Motor Group headquarters in Seoul (Yonhap)
Hyundai Motor Group headquarters in Seoul (Yonhap)

Operating profit also plunged 15.5 percent on-year to 1.34 trillion won over the same period, while sales grew 6.7 percent to 22.35 trillion won.

The results were below the market consensus. Major local brokerages predicted a net income of 1.48 trillion won and an operating profit of 1.37 trillion won.

Shares of Hyundai Motor closed up 2.68 percent to 153,500 won on the Seoul bourse, outperforming a 0.25 percent rise in the benchmark KOSPI.

“Despite the won’s descent against the dollar, the economic slowdown in emerging markets reeling from the protracted low crude oil prices hurt overall demand for cars that are produced here and shipped overseas,” the company said.

“The falling value of currencies in emerging markets, such as Russia and Brazil, also diluted the overall effect of the won’s descent,” it added.

Hyundai Motor said that it sold a total of 1,107,377 units of cars here and abroad in the first quarter, a 6.4 percent drop from the same period a year earlier.

On its home turf, its auto sales expanded 3.7 percent on-year bolstered by the government’s extended tax cuts on new vehicle purchases. A slump in demand from emerging markets, however, led to a 7.9 percent decline in its overseas sales.

In particular, Hyundai Motor said its business in China remained a drag. Its total sales there came to around 229,000 units, down from the 280,000 cars reported a year earlier.

The disappointing results in the world’s largest market were attributed to Hyundai Motor’s sedan-oriented product mix there at a time when demand for SUVs is fast expanding.

The company expects that the slump in emerging markets will likely persist in the second quarter. But it added that its overall profitability will improve, citing new models, including the all-new Elantra and the Ioniq in global markets, along with its expanded lineups of SUVs.

“Since the all-new Avante, one of our largest volume models, was successfully launched in the U.S. and China in the first quarter, it has been drawing a favorable market response,” a company official said. (Yonhap)