Hyundai Motor profit down for ninth straight quarter as China sales sag
By Hyunjoo Jin
SEOUL (Reuters) - Hyundai Motor (005380.KS: Quote) posted its ninth straight quarterly profit drop on slower sales in China and other emerging markets, a trend the South Korean automaker seeks to reverse by supplying more sport utility vehicles (SUVs) and launching new sedans.
Strength in smaller, fuel-efficient sedans helped Hyundai Motor outperform the industry during the global economic downturn, but has left it reeling from a consumer shift to gas-guzzling sport utility vehicles (SUVs) in recent years, driven by a slump in the price of oil.
Hyundai Motor, the world's fifth-biggest automaker together with affiliate Kia Motors (000270.KS: Quote), reported on Tuesday a 12 percent drop in first-quarter net profit to 1.69 trillion won ($1.47 billion), but higher than the 1.46 trillion won average estimate of 14 analysts polled by Thomson Reuters I/B/E/S.
In China, its biggest market, Hyundai Motor sold 10 percent fewer vehicles in the quarter, as it trailed rivals in tapping soaring demand for SUVs.
"The biggest challenge facing Hyundai is securing its competitiveness in China and maintaining its market share there," said Kim Sung-soo, a fund manager at LS Asset Management, which owns Hyundai Motor shares.
Revenue rose 7 percent to 22.35 trillion won for the quarter, but operating profit declined 16 percent to 1.34 trillion won.
Hyundai Motor said on Tuesday it will aim to gradually improve earnings by launching its Elantra sedans and boosting SUV supply in the U.S. and China markets.
Hyundai needs to build its fourth and fifth factories in China because of its sustained growth, Hyundai's chief financial officer Choi Byung-chul said in an earnings conference call. His comments come amid concerns about slowing growth and rising competition in the world's biggest auto market. Continued...