Jan. 23 (Bloomberg) -- Hyundai Motor Co., South Korea’s largest carmaker, reported profit that missed analysts’ estimates after a stronger won eroded export earnings and domestic sales fell.
Fourth-quarter net income climbed 15 percent to 2.06 trillion won ($1.9 billion), from 1.79 trillion won a year earlier, the Seoul-based company said today. That missed the 2.22 trillion-won average of 19 analysts’ estimates compiled by Bloomberg.
The result caps a year in which Hyundai replaced its U.S. chief to revive flagging sales, the chief technology officer resigned after record recalls, and the company agreed with affiliate Kia Motors Corp. to settle lawsuits for overstating fuel-economy ratings. Chairman Chung Mong Koo, chairman of both automakers, forecast the weakest sales growth in eight years for 2014 as competition intensifies and the stronger won hampers exports.
“The strong won remains a concern for the company,” Shin Chung Kwan, a Seoul-based analyst at KB Investment & Securities Co., said by phone today. “Still, the company will be able to maintain its profit margins of up to 9.5 percent, helped by sales of new profitable models.”
Hyundai will introduce the revamped Sonata sedan and begin sales of its Genesis premium sedan in the U.S. and Europe this year, according to the company.
The company’s shares fell 1.9 percent to 232,000 won at the close in Seoul. They gained 8.2 percent last year.
Hyundai plans to increase deliveries this year by 3.8 percent to 4.9 million vehicles, according to the company. That’s the weakest sales growth target in eight years, according to company data compiled by Bloomberg News.
The company expects global industrywide auto demand to increase by 4.1 percent to 84.6 million units, with China growing 12 percent, the U.S. by 3.4 percent and Europe by 2.5 percent, Hyundai’s Chief Financial Officer Lee Won Hee said in a conference call today.
The automaker will probably post a record profit of 9.42 trillion won this year, according to the average of 30 analyst estimates compiled by Bloomberg.
Among its regions, Hyundai’s U.S. sales rose 2.5 percent in 2013, lagging behind the 7.6 percent expansion in total auto industry sales. The company last month named Dave Zuchowski as U.S. chief executive officer to replace John Krafcik, without elaborating on reasons for the change.
Zuchowski will face the challenge of reversing Hyundai’s sales slump in its second-biggest market and improving its safety ratings. Hyundai is counting on the revamped Genesis, which won the North American Car of the Year award in 2009, and an overhaul of the Sonata mid-size sedan, the carmaker’s bread-and-butter model, to boost sales in the U.S.
Longer-term, Hyundai’s U.S. goal is a 5 percent share, with the new Genesis and Sonata models driving gains, Zuchowski said in an interview on Jan. 13. The automaker should end this year with a 4.7 percent share, a small improvement from last year’s 4.6 percent, he said.
The won gained 23 percent against the yen last year, Hyundai’s competitiveness against Toyota Motor Corp. and other Japanese automakers in exporting to the U.S.
The company based its 2014 business forecast on an average rate of 1,050 won per dollar this year, Hyundai’s CFO Lee said. Hyundai expects the yen to remain weak this year, at an average 107 yen per dollar, he said.
Hyundai’s incentives in the U.S. surged 38 percent in 2013, compared with a 0.6 percent rise at Toyota and the market average of a 3.8 percent increase, according to Autodata Corp.
Hatchbacks in Brazil
In Brazil, sales of the HB20 hatchback, designed specifically for the market, helped Hyundai to book record quarterly sales of 59,140 units in the three months ended Dec. 31, according to an e-mailed response from the company.
Annual deliveries in China rose 21 percent in 2013, according to the company. Hyundai posted record quarterly sales in its largest market as deliveries rose 3.7 percent to 273,283 vehicles in the three months ended December, led by sales of the Beijing-built Elantra Langdong sedan and Tucson SUV, the company said.
This year, the company forecast it will sell 1.13 million vehicles and trucks in the country, helped by China-specific models including the Mistra sedan, and the completion of its commercial vehicle manufacturing plant in Sichuan, Lee said.
In South Korea, Hyundai’s biggest manufacturing base, sales fell 13 percent last quarter for a fourth consecutive decline, as global carmakers including Bayerische Motoren Werke AG and Audi AG took market share with imports of fuel-efficient diesel models.
Sales of imported vehicles in South Korea jumped 20 percent to 156,497 vehicles last year, slowing to an estimated 10 percent growth this year, according to an e-mailed statement from Korea Automobile Importers & Distributors Association.
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