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Hyundai Motor turbo-charges Europe sales, defies downturn
July 25, 2012 / 9:04 PM / 5 years ago

Hyundai Motor turbo-charges Europe sales, defies downturn

* Set to post 13th straight quarter of rising profits

* Net profit seen at 2.52 trln won, up 9 pct on year

* Defies European slump; China a weak spot

* Quarterly vehicle sales seen close to record level

* Shares down 18 pct since May on macro concerns, labour tension

By Hyunjoo Jin

SEOUL, July 26 (Reuters) - South Korean automaker Hyundai Motor is set to report its 13th straight quarter of rising profits on Thursday as it produced close to record high global vehicle sales in the face of sluggish markets in Europe and China.

Hyundai Motor, the world’s fifth-biggest carmaker along with affiliate Kia Motors, is expected to post net profits of 2.52 trillion Korean won ($2.20 billion) for April to June, a rise of 9 percent over a year earlier.

It would mark the 13th quarter in which profits have risen compared with a year earlier. But, reflecting weakness in some key markets, a rise of 9 percent would also be the slowest pace of quarterly profit growth in more than three years.

“Hyundai is selling cars all over the world, so it can’t avoid a global demand slowdown. Hyundai’s models are also ageing, while competitors are launching new models,” Kim Young-min, a fund manger at IBK Asset Management, said.

The slowdown underlines the challenges facing the stellar performer - meeting lofty investor expectations after years of dizzying growth.

Indeed, Hyundai shares have fallen about 18 percent since May on concerns about the global downturn and labour tensions over an annual wage deal.

The company sold 1,111,266 vehicles in the quarter globally, just 715 sales short of the record level in the last quarter of 2011, according to estimates by Korea Investment & Securities.

Expected revenues in April to June of 21.71 trillion won and operating profit of 2.47 trillion won would mean Hyundai will post a healthy 11.4 percent operating margin - similar to the previous quarter.


Bigger rivals, such as General Motors and Volkswagen , have seen sales fall in Europe as they have relied more on China. That contrasts with Hyundai.

It has lagged rivals in growing its China market in the last couple of years, partly because of capacity constraints in meeting demand.

It had posted the biggest gains in China market share among top automakers for the past decade. China is now Hyundai’s biggest market, accounting for nearly 20 percent of its global sales in 2011.

Hyundai said this week that preliminary figures showed its China sales rose a meager 2 percent to 184,748 vehicles in April to June from a year earlier.

In Europe, Hyundai’s sales jumped 18 percent, more than double its global sales growth pace of 7 percent. New passenger car registrations in the European Union fell 6 percent in the second quarter from a year earlier, industry body ACEA said.

China’s economic slowdown is expected to keep industry-wide auto sales growth at 7-8 percent this year -- single-digit growth for a second year in a row, or the slowest back-to-back years since the market first took off in the late 1990s.

“The China auto market has not improved much in the second quarter despite the production recovery of Japanese carmakers,” Cho Soo-hong, an auto analyst at Woori Investment & Securities in Seoul, said.

“Hyundai will sell more cars in China in the second half as its new, third China plant has just started production and the market will improve from the first half,” Cho said. ($1=1,146 won) (Additional report by Eunhye Shin in SEOUL and Norihiko Shirouzu in BEIJING; Editing by Neil Fullick)

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