Third-quarter net income climbed 5.6 percent to 2.14 trillion won ($2 billion) from a year earlier, the Seoul-based company said today. That compares with the 2.15 trillion won average of 25 analysts’ estimates compiled by Bloomberg.
Deliveries in China rose 15 percent and sales from its Brazil factory reached a record a year after beginning production in the country. Hyundai is counting on the new Sonata, which shook up the U.S. midsize sedan market when it was last overhauled in 2009, to spur demand when it goes on sale next year.
“I expect Hyundai to struggle a bit for the time being as the won is strengthening and they don’t have new volume models coming up until next year,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd., which oversees about $7.5 billion including Hyundai’s shares, said by phone. “The Sonata sedan may help profits once it goes on sale next year.”
Hyundai shares fell 1.9 percent to 253,500 won at the close in Seoul trading. The shares have gained 16 percent this year, compared with the 2.5 percent advance in the benchmark Kospi Index.
The company is meeting growing demand in China by expanding its third plant, which will add 150,000 units a year in output from January next year, bringing the automaker’s total production in the country to 1.05 million units.
Hyundai is also considering building a fourth plant in China and plans to increase the number of dealerships to 1,000 by 2015 from about 800 this year, according to the company.
Total production this year will probably reach more than 4.7 million units, exceeding Hyundai’s forecast by about 1.3 percent, Kim Yeung Tae, deputy chief financial officer, said in a conference call today.
In Brazil, sales of the HB20 hatchback, designed specifically for the market, helped Hyundai to book record quarterly plant sales of 46,578 units in the three months ended September. The company will increase annual output by 20,000 units in the country from 2014, bringing the total production to 170,000 units, Kim said.
The gains from emerging markets helped Hyundai cushion the fallout from a three-week labor strike at its South Korean plants and slowing sales in the U.S.
Hyundai Motor’s union workers in South Korea approved a wage deal on Sept. 9 that raised annual compensation by 28.8 million won per person, including an average increase in base salaries of 5.1 percent, according to the union. That ended strikes that caused 50,191 vehicles in lost output, according to company estimates.
The stoppages, which began on Aug. 20, dragged down third-quarter exports from South Korea -- home to 46 percent of the automaker’s production capacity -- by 3.6 percent, according to the company’s website.
The won has gained about 27 percent against the yen in the past year, curbing affiliate Kia Motors Corp. (000270) and Hyundai’s competitiveness against Japanese automakers in exporting to the U.S. The company expects the won to strengthen to 1,070 won against the dollar in the fourth quarter, Kim said.
Hyundai’s incentives in the U.S. surged 47 percent in the first nine months of this year, compared with a 2.2 percent decline at Toyota and the market average of a 2.4 percent increase, according to Autodata Corp.
The automaker’s sales rose 2.2 percent in the U.S. market last quarter, trailing the industry’s 8.9 percent growth. Its deliveries rose 3.7 percent in Europe in the July-to-September quarter.
The company forecast global auto demand to increase by about 4 percent to 83.6 million units next year, as demand recovers in Europe and increases in emerging markets including China.
The Seoul-based company also released renderings today of its new Genesis sedan, scheduled to go on sale later this year. Hyundai’s second-most expensive model was also the first by the company to win the North American Car of the Year in 2009.
To contact the reporter on this story: Rose Kim in Seoul at firstname.lastname@example.org
To contact the editor responsible for this story: Young-Sam Cho at email@example.com