Hyundai Motor's profit drops 28 percent as appreciation of local currency weighs
SEOUL, South Korea (AP) -- Hyundai Motor Co. said Thursday its profit sank nearly 30 percent for the July-September quarter, hurt by a stronger South Korean currency and weak sales growth in its home market.
South Korea's largest carmaker said its third quarter net income of 1.6 trillion won ($1.5 billion) was down 28 percent from 2.3 trillion won a year earlier.
Sales rose 2 percent to 21.3 trillion won. Hyundai said it sold 3.62 million vehicles during the first nine months of the year, 4 percent higher from a year earlier.
Despite higher sales, profit fell as the stronger won against the U.S. dollar and the Japanese yen reduced the value of its overseas sales when recalculated as won. Hyundai said the local currency's average value during the third quarter was highest since mid-2008. In addition, sudden volatility in foreign exchange rates at the end of September raised some expenses, it said.
The company also underperformed foreign rivals in its home market even though an upgraded Sonata sedan went on sale. Its domestic sales inched up just 1.5 percent from a year earlier during the quarter. Growth in sales of imported cars was more than 10 percent.
One bright spot was a sharp rise in sales of the Genesis luxury sedan in South Korea. Hyundai's overseas sales rose 5 percent.
Hyundai's share price has slumped since a Hyundai-led consortium last month decided to spend $10.1 billion for land in Seoul for new headquarters, sparking criticism that Chung Mong-koo, chairman of Hyundai Motor, was wielding outsized influence. The company's union staged a strike to protest the high-priced deal, hurting local production.
Hyundai's share price closed 6 percent higher after the earnings release, the biggest jump since the announcement of the land purchase. Hyundai's chief financial officer told investors that the company will consider increasing its dividend next year.
The company said it expects its profit to improve during the final quarter of this year as the South Korean won is expected to weaken. Following a recent wage agreement with the union, local manufacturing lines will operate at a higher rate and boost production, it said.