Seoul: Hyundai Motor Co, South Korea’s top automaker, could report quarterly profit more than doubled from the January-March period, and is set to outperform the rest of the ailing industry through the rest of the year.
Its affiliate Kia Motors Corp is expected to report a 63% year-on-year jump in second quarter profit, helped by a weaker won and new models.
The softer local currency, along with growing appetite for smaller cars and a much-improved brand image, may continue to help Hyundai and Kia outperform its peers, analysts said.
Renewed hopes for a recovery in the global economy are also seen allowing Hyundai and Kia, which combined are the world’s No.5 car maker, to keep ahead of competitors such as Toyota Motor Corp.
“The recent global economic crisis was not a poison but a restorative to Hyundai as the company found a way to expand market share. Now, an economic recovery may help boost Hyundai’s growth further,” said Kang Sang-min, an auto analyst at Tong Yang Securities.
The maker of the Elantra compact car is expected to post a net profit of won456 billion ($361 million) in the second quarter, a Reuters poll of 10 analysts showed.
That is down 17% from a won546.9 billion profit a year ago, but a vast improvement from a won225 billion profit in the first quarter.
The won496.5 billion forecast for operating profit is more than triple the January-March period.
Kia is expected to post won159 billion in net profit for April-June, compared with won86 billion profit a year ago.
Hyundai’s second-quarter sales are seen falling 13% from a year ago to won7.88 trillion, but up from won6.03 trillion in the previous quarter as government incentives such as tax breaks and easier consumer financing boost domestic car sales.
South Korea is not the only country to take steps to bolster car industry, but Hyundai is seen as major beneficiary as the measures are mostly for smaller and more fuel-efficient cars, analysts said.
Hyundai this week raised its 2009 sales target in China for a second time citing stimulus measures to boost car demand.
The weak currency has also helped. The won rose about 10% against the dollar in the second quarter compared with the quarter, but fell some 20% from a year earlier, according to Reuters’ calculations.
Hyundai also plans to unveil revamped models of the Sonata sedan and the Tucson sport utility vehicle in the second half.
For 2009, the company’s net profit is expected to fall 3.9% to won1.39 trillion , according to a Reuters Estimates’ poll of 20 brokerages.
That compared with loss forecasts for Japanese makers, which are struggling we soft demand and a strong yen. Toyota is seen posting a ¥354 billion net loss in fiscal 2009/10.
Shares in Hyundai jumped by a third in the second quarter, outperforming a 15% gain in the wider market.