Hyundai Motor Profit Declined After Deliveries in China FellRose Kim
Hyundai Motor Co. reported profit declined for a fifth consecutive quarter after sales fell in China and Brazil’s real weakened against the won, eroding overseas earnings at South Korea’s biggest automaker.
Net income fell 1 percent to 1.91 trillion won ($1.76 billion) in the quarter ended March, the Seoul-based company said today. That beat the 1.71 trillion won average of 23 analyst estimates compiled by Bloomberg. Operating profit declined 18 percent to 1.59 trillion won, missing the 1.71 trillion won average of analyst estimates.
Quarterly sales in China declined amid intensifying competition in the carmaker’s largest market, and a weaker real lowered the value of earnings repatriated from Hyundai’s Brazil business. The carmaker is counting on new versions of its Tucson sport-utility vehicle, unveiled earlier this year, and Elantra sedan to boost sales.
Hyundai is considering an interim dividend payout and will continue to increase dividends, Chief Financial Officer Lee Won Hee said today on a post-earnings conference call.
Shares of Hyundai rose 3.2 percent to close at 175,500 won in Seoul trading, their highest level since March 23.
“A better-than-expected net income increases the likelihood of a higher dividend at the end of the year,” said Shin Chung Kwan, an analyst at KB Investment & Securities Co. “There’s also expectation that sales will recover in coming quarters helped by Hyundai’s new models.”
Revenue fell 3.3 percent to 20.9 trillion won, compared with the 21.3 trillion won average of analyst estimates.
Hyundai’s global deliveries declined 3.6 percent in the quarter, according to a regulatory filing on April 1.
In the U.S., Hyundai’s second-largest market by volume, sales climbed 7.5 percent. With demand rising in the U.S., Hyundai is “actively” considering expanding production in the country, CFO Lee said. The automaker is also evaluating making a pick-up truck in the market, he said.
In the first quarter, the won rose 18 percent against Brazil’s real, according to data compiled by Bloomberg. That reduced the value of repatriated earnings from the South American country. In China, Hyundai was outsold by Ford Motor Co. for the first time. Sales, including vehicles it imports and ones it makes at its plants in China, fell 2 percent.
Hyundai, which showed a version of its revamped Tucson SUV at the Shanghai auto show earlier this week, will start selling the model in China in October, Lee said.