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Hyundai bets on US, South Korea sales as profit beats estimates
SOUTH Korea's Hyundai Motor unveiled a promising outlook for sales at home and in the United States, and also reported its first rise in profit in five quarters, in an early sign of recovery even as it battles a slump in China.
This comes as Hyundai's heir apparent Euisun Chung tightens his grip and reshuffles top management to revive stalled growth at the automaker - once hailed as a star performer during the global financial crisis about a decade ago.
Hyundai is now rolling out a full lineup of sport utility vehicles (SUVs) this year, after a consumer shift to the segment took a toll on its sedan-heavy lineup.
In the quarter ended March, Hyun-dai raked in a better than expected 24 per cent rise in net profit to 829 billion won (S$979 million), versus an eight-year low plumbed a year earlier, its first year-on-year rise since end- 2017.
That beat an average estimate of 758 billion profit from 15 analysts polled by Refinitiv.
Its operating profit rose 21 per cent to 825 billion won and revenue climbed 7 per cent to 23.99 trillion won, as its South Korea sales hit a 17-year high and US sales rose for the first tine since 2016.
"We will try to sustain our profit improvements driven by new models," CFO Choi Byung Chul said on an earnings call on Wednesday, adding that Hyundai is aiming for an operating margin of more than 4 per cent this year versus 2.5 per cent last year.
He also said that Hyundai had decided to suspend its oldest plant in China to better manage its massive overcapacity there and respond to Beijing's efforts to tackle pollution.
Hyundai's first-quarter sales in China slumped 19 per cent to the lowest since 2009, hit by the lack of attractive models and strong branding amid competition from local and global rivals.
An overall slowdown in car sales in China in the quarter, after contracting in 2018 for the first time in almost three decades, further pressured Hyundai's sales in the world's biggest car market.
The Chinese gloom was, however, offset by improving business in Hyundai's two other key markets during the first quarter.
At home, its sales rose 9 per cent to the highest since 2002 with its Palisade large SUV selling better than expected, even as its rivals such as General Motors, Renault, Mercedes Benz and BMW struggled with falling sales.
Hyundai, which with affiliate Kia Motors is the world's the No 5 automaker, expects to exceed this year's sales target of 712,000 vehicles for the domestic market, driven by upcoming models such as its Genesis G80 sedan and GV80 SUV.
In the US, the third-biggest market for Hyundai after China and Korea where it is slowly catching up with the shift to SUVs, the carmaker's sales rose 2 per cent. Hyundai said it aims to turn around its US sales and profits this year.
Shares of the automaker rose 1.8 per cent after the results, outperforming the wider market's 0.9 per cent fall. REUTERS