Hyundai Motor’s net profit down 14 per cent on strong won

SEOUL, Korea, Republic Of – Hyundai Motor Co. said Thursday its net profit for the second quarter fell 14 per cent over a year earlier due to the South Korean won’s strength against the U.S. dollar.

South Korea’s largest automaker said its April-June net income was 701 billion won ($626 million), compared with 817 billion won a year earlier.

It was lower than the analyst consensus of 897 billion won, according to financial data provider FactSet.

Sales inched up 2 per cent over a year earlier to 24.7 trillion won ($22.1 billion) but operating profit sank 29 per cent to 951 billion won ($849 million).

Hyundai Motors’s profit fell despite it having sold more vehicles. That is because its overseas profit repatriated to South Korea shrank due to the cheaper U.S. dollar.

In April-June, car sales rose 11 per cent over a year earlier to 1.2 million units. For the first half of this year, sales rose 4.5 per cent to 2.2 million units.

In the U.S. market, Hyundai’s car sales fell sharply during the first six months of this year as new SUV models such as the Kona did not help sales until May, while demand for Hyundai’s flagship sedans stayed weak. Sales in South Korea were helped by new SUV models.

Hyundai’s sales revived after sinking in China last year due to a diplomatic row over South Korea’s deployment of a U.S. missile defence system. But Hyundai uncertainties related to the THAAD missile system remain since Chinese consumers have shunned Korean products.

Going forward, Hyundai cited global trade tensions as a troubling source of uncertainty that could dent auto demand, if prolonged. If the U.S. government imposes tariffs on foreign-made cars or components, car prices for consumers will jump, hurting the industry, Hyundai said.