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Hyundai sees rising competition after Q3 profit rise

Hyundai sees rising competition after Q3 profit rise
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First Published: Thu, Oct 27 2011. 12 19 PM IST

Bloomberg
Bloomberg
Updated: Thu, Oct 27 2011. 12 19 PM IST
Seoul: South Korea’s Hyundai Motor warned of rising competition and economic uncertainty after it posted on Thursday a 21% rise in quarterly net profit, fueled by solid sales gains in the United States, Europe and other markets.
Hyundai, the world’s fifth-biggest carmaker by sales, along with affiliate Kia Motors , also said it will beat its already-upgraded sales target of 4 million units this year, after its global sales rose 9.6% in the third quarter from a year earlier.
Once viewed as manufacturers of bland but economical cars, Hyundai and Kia have addressed design and reliability problems in recent years to outperform during the global financial crisis and have become formidable competitors to more established rivals.
Their sales are expected to remain solid in the fourth quarter with new models winning over consumers with attractive prices, features and styling, analysts said.
The South Korean duo will also continue to benefit from the cheaper won and the woes of Japanese rivals suffering from a strong yen and floods in Thailand, where some maintain production units, they said.
Bloomberg
Still, maintaining sales momentum next year in the face of a slowing global economy, resurgent Japanese automakers, and stretched manufacturing capacity is seen a challenge.
“We believe our Sonata and Elantra are ahead of Toyota’s new Camry and Honda’s new Civic in terms of product competitiveness. We will continue to see sales gains in the fourth quarter and exceed our 2011 sales target,” Lee Won-hee, Hyundai’s chief financial officer, told participants on an earnings conference call.
Hyundai’s president, Chung Jin-haeng, told Reuters on Tuesday that Hyundai and Kia expected to beat their already upgraded combined 2011 sales targets of 6.5 million vehicles, but the growth rate is forecast to slow next year because of capacity constraints.
“Hyundai will probably benefit from some operational issues that its Japanese counterparts are facing due to flooding in Thailand, where some production units are located,” said Jung Sang-jin, a fund manger at Dongbu Asset Management.
“Looking at next year however, earnings growth momentum may slow. This is quite natural given that Hyundai has seen very sharp earnings growth in recent years. Hyundai has a stronger presence in the United States than Europe, so the health of the U.S. auto market is one uncertainty.”
Hyundai on Thursday reported a 1.92 trillion won ($1.7 billion) net profit for the July-to-September quarter, in line with a consensus forecast of 1.89 trillion won from Thomson Reuters.
That was up from a 1.59 trillion won net profit a year ago and down from 2.31 trillion won in the preceding quarter.
Shares in Hyundai Motor rose 0.7% versus the wider market’s 1.1% gain as of 0507 GMT. Its shares have jumped 29% this year, outperforming the broader market’s 8% fall.
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First Published: Thu, Oct 27 2011. 12 19 PM IST
More Topics: Company Results | Hyundai Motors | Cars | Toyota | Auto |