Hyundai Motor Profit Rises 31%, Beating Analyst Estimates
Hyundai Motor Co. (005380), South Korea’s largest carmaker, reported first-quarter profit that exceeded analysts’ estimates, helped by sales of the Elantra sedan and i20 subcompact in Europe and the U.S.
Net income climbed 31 percent to 2.45 trillion won ($2.2 billion), compared with 1.88 trillion won a year earlier, the Seoul-based company said in a statement today. Profit beat the 2.07 trillion won average of 25 analyst estimates compiled by Bloomberg. Revenue increased 11 percent to 20.2 trillion won.
The Sonata and Accent sedans fueled a 15 percent increase in U.S. deliveries in the quarter, while the i20 hatchback helped drive a 13 percent rise in Europe, bucking the region’s economic slump that pushed down demand for vehicles to a 14-year low last month. The company has said since January that it expects sales to climb 5.7 percent to 4.3 million units in 2012 and reach 7 million vehicles when combined with those of affiliate Kia Motors Corp. (000270)
“The global auto industry is expected to improve in the second half of this year, as U.S. demand remains strong and China’s growth turns around,” said Shin Chung Kwan, an analyst at KB Investment and Securities Co. in Seoul. “I expect other major automakers to post improved operating profits.”
Operating profit, or sales minus the costs of goods sold and administrative expenses, rose 25 percent to 2.28 trillion won. That exceeded the 2.11 trillion won average analyst estimate compiled by Bloomberg.
Hyundai, the first among major global carmakers to report results for the latest quarter, gained 1.8 percent to 262,000 won at the close in Seoul trading, while the benchmark Kospi index rose 0.1 percent.
The company raised its forecast for global auto market growth in 2012 to 5.6 percent, helped by demand in the U.S., Lee Won Hee, Hyundai’s chief financial officer, said today. This is bigger than the 3.6 percent increase it forecast at the beginning of this year, he said.
“The increase in U.S. auto industry’s demand is more than we had expected,” Lee said. “Our Elantra and Sonata supply is not able to keep up with the demand in the U.S.”
Hyundai isn’t concerned about stiffer competition from Japanese rivals such as Toyota Motor Corp. (7203) and Honda Motor Co. (7267), which are rebounding from last year’s natural disaster, he said. The South Korean carmaker plans to introduce five new models in the U.S., including the new Santa Fe sport-utility vehicle and a revamped Elantra.
In China, the world’s largest automobile market, Hyundai’s sales rose 6.8 percent in the first quarter, bucking a decline in industry deliveries, fueled by demand for the Accent, whose deliveries jumped 80 percent last quarter. To meet demand, Hyundai plans to start production of its China-exclusive Elantra, introduced as Langdong in the country, at the newly completed third plant, the company said in an April 23 e-mail.
Production at Hyundai’s third plant in China will begin in July, which will increase the automaker’s production capacity to 1 million units in the country, according to the company.
Rising gasoline prices have undermined demand in China, where Volkswagen AG (VOW) and BAIC Motor Corp. warned this week of rising inventory levels in the industry.
Average prices of cars produced in China have fallen for three straight months as quarterly sales shrank for the first time since 2005 during the first three months of the year.
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