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Hyundai Motor posts 2 bln USD operating profit in Q1

04-26-2012 14:39 BJT

SEOUL, April 26 (Xinhua) -- Hyundai Motor, South Korea's No.1 automaker, said Thursday that its operating profit jumped 24.9 percent in the first quarter helped by brisk overseas sales that offset underperformance in the domestic market.

Consolidated operating profit, which includes earnings from overseas affiliates, reached 2.28 trillion won (2 billion U.S. dollars) during the January-March period, up 24.9 percent from a year earlier, according to an e-mailed statement. From three months before, the figure expanded 7.3 percent.

Sales advanced 10.6 percent on-year to 20.16 trillion won in the three months ending on March 31, and net income amounted to 2. 45 trillion won, up 30.6 percent from the same period of last year.

The first-quarter operating profit was higher than a market consensus of between 2 trillion won and 2.2 trillion won. Experts predicted the solid performance due to strong overseas demand. "Since the beginning of this year, Hyundai has posted strong sales growth in all major regions, except the domestic market. The company managed to gain market shares in the U.S. despite concerns over limited capacity, and it is outperforming in Europe. Robust sales momentum will continue in the second quarter due to strong seasonality," Michael Yun, an analyst at Daewoo Securities in Seoul, said before the announcement.

Hyundai's first-quarter global sales increased 16.7 percent on- year to 1,072,679 units, topping 1,039,000 units tallied in the second quarter of 2011 when the carmaker recorded its best quarterly operating profit.

Domestic sales shrank 7.1 percent on-year to 154,800 units in the first quarter, but exports of locally-made cars and sales of products manufactured in overseas plants amounted to 328,771 units and 589,108 units respectively, up 22 percent from the same period of last year.

Hyundai Motor logged brisk sales in the European market, where demand remained weak amid uncertainties such as the region's debt crisis and economic downturn. Passenger car sales in Europe contracted 6.6 percent on-year to 1.5 million units in March, declining for six months in a row. The first-quarter sales were down 7.3 percent compared with a year earlier.

Competitors, especially European automakers, struggled, but Hyundai and its affiliate Kia Motors marked its record monthly sales in Europe. In March, Hyundai's sales in Europe were up 13.8 percent on-year to 50,100 units, and Kia's sales were up 17.3 percent to 35,300 units, while sales by Fiat, PSA, Renault, GM, Honda and Toyota shrank by 25.8 percent, 19.2 percent, 20.4 percent, 10.2 percent, 23 percent and 2.1 percent respectively. "Hyundai's outperformance in Europe is due to new model launches, including new i40 and i30, increased finance sales through a joint venture auto finance company with Santander and the establishment of wholly-owned sales subsidiaries in major markets such as Germany and France,"said Kim Byung-kwan, an analyst at Mirae Asset Securities in Seoul.

In addition to Europe, Hyundai maintained its highly profitable operation in the U.S. on the back of a solid market rebound. On top of that, Hyundai was expected to gain momentum in the domestic market with the rollout of new Santa Fe, a volume-type sport utility vehicle (SUV).

New construction of factories in BRICs countries was expected to boost its earnings momentum."The ramp-up of a third China plant with a production capacity of 300,000 units and a Brazil plant with 150,000 units will boost supply from the second half. The BRICs economies are expected to rebound, providing further growth momentum,"said Eric Choi, an analyst at Shinhan Investment Corp. in Seoul.

Despite the weakening global car market, Hyundai set its target for this year's global sales at 4.29 million vehicles, up 5.7 percent from a year earlier. Target for local sales was set at 684, 000 units, while the target for exports of locally-made cars was placed at 1,261,000 units. The company targeted 2,345,000 units of sales for cars made in overseas plants in 2012. "Global demand for cars is expected to grow 5.6 percent on-year to 77 million units in 2012. Demand in the U.S. is projected at 14 million units, and those for Europe and China are estimated to reach 14.3 million units and 13.6 million units each," Lee Won-hee, vice president of Hyundai Motor, said at a conference call.

Despite the expected growth in global car demand, uncertainties were expected to continue in the global auto industry due to the European fiscal crisis and weaker demand in emerging countries, said Lee.

Reflecting positives from Hyundai, global credit rating agency Standard & Poor's raised its ratings last month on the South Korean automaker by one notch to BBB-plus. The S&P said that Hyundai will likely maintain its sound financial risk profile based on a stronger competitive position in the global auto industry and improved profitability.

Editor:Wang Lingfei |Source: Xinhua

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