- Brexit contributing to outlook for unfavorable markets
- South Korean automaker dials back production in Brazil, Russia
Hyundai Motor Co. said Britain’s move to leave the European Union and slumping emerging market economies are weighing on its outlook for the second half of the year after posting its 10th consecutive drop in quarterly profit.
South Korea’s largest automaker expects unfavorable market conditions on Brexit-related uncertainties and continued slowdown in emerging markets, Choi Byung Chul, Hyundai’s chief financial officer, said on a conference call. While net income fell to 1.66 trillion won ($1.46 billion) in the three months through June, the result beat analysts’ estimates that profit would decline to 1.62 trillion won.
“The outlook of the global auto market in the second half is not good,” Lee Sang Hyun, a Seoul-based analyst at IBK Securities Co., said by phone. “As for Hyundai, it may expand incentives to keep its market share amid intensifying competition.”
Hyundai rose 0.4 percent at Tuesday’s close in Seoul, paring the decline for the shares this year to 8.7 percent.
With Brazil confronting its worst downturn in a century and Russia dealing with its biggest currency crisis since 1998, Hyundai dialed back shipments from its plants in each of those markets by more than 10 percent during the first half.
Economic slowdowns and weak oil prices also weighed on Hyundai’s factories in South Korea, which reduced production despite consumers at home rushing to buy cars ahead of a consumption tax cut that expired at the end of June. Sales from domestic plants fell 8.2 percent in the first half.
One bright spot for sales this year has been China, where Hyundai’s plant in its largest overseas market boosted sales by about 28 percent in the second quarter. Tucson sport utility vehicle shipments from the China plant more than doubled in the first half, pacing Hyundai’s rebound from its first annual sales drop in that market since 2007.
Sales may slowly improve in the second half as Santa Fe SUV production returns to Hyundai’s U.S. factory in Alabama, Choi said. The automaker also plans to begin making its Creta SUV in Russia and is introducing new Genesis luxury brand and Ionic sedans to more markets worldwide.