(ATTN: ADDS analyst comment and stock price in paras 5-8)
By Choi Kyong-ae
SEOUL, April 26 (Yonhap) — Hyundai Motor Co., South Korea’s biggest carmaker by sales, said Thursday its first-quarter net profit plunged 48 percent on the strong won and weak sales in two major markets.
In an earnings shock, net profit for the three months ending March 31 halved to 731.6 billion won (US$678 million) from 1.406 trillion won a year earlier, the company said in a statement.
“The net result was affected by the won’s strength against the dollar, weak demand in the United States and China, and decreased working days due to strikes during wage talks for this year,” a company spokesman said.
The dollar traded at an average of 1,072.3 won in the first quarter from 1,154.3 won a year earlier. A strong won drives down the value of dollar-denominated overseas earnings when converted into the local currency.
On Thursday, shares in Hyundai Motor nosedived 4.57 percent to 156,500 won, underperforming the broader KOSPI’s 1.1 percent gain.
Looking ahead, Hyundai Motor expected slower growth in the global auto industry amid the spread of protectionism that will stiffen competition among carmakers and raise uncertainties about development of future technologies, such as autonomous cars.
Analysts said it will take some time for Hyundai to revive its sales in the world’s two major markets as the carmaker belatedly came up with sport-utility vehicles targeting customers there. Global demand for SUVs is on the rise helped by low oil prices.
“Hyundai Motor may not make a meaningful recovery at least in its second-quarter earnings as sales of new vehicles, such as the Santa Fe SUV, have yet to be reflected in the bottom line,” Daishin Securities analyst Park Choon-young said.
Sales in the U.S. fell 4.9 percent to 273,000 vehicles in the first three months from 287,000 units. Sales in China dropped 17 percent to 163,000 from 196,000 during the same period, the statement said.
Globally, the maker of the Sonata sedan and Santa Fe SUV sold a total of 1.05 million autos, down 1.7 percent from 1.07 million units, it said.
Operating profit also declined 46 percent to 681.3 billion won in the first quarter from 1.251 trillion won a year ago. Sales were down 4 percent at 22.437 trillion won from 23.366 trillion won during the same period, the company said.
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