Hyundai Motor Co., South Korea's biggest automaker, posted an unexpected 10 percent fall in first- quarter profit, the fifth straight decline, as a stronger won compounded a slump in sales of Sonata sedans and other models.
Net income was 307.4 billion won ($330 million) in the three months ended March 31, compared with 342.4 billion won a year earlier, the Seoul-based automaker said in a statement today. That was less than the 363.9 billion won median estimate in a Bloomberg News survey of nine analysts. Sales fell 2.6 percent to 6.68 trillion won.
Hyundai Motor has lost market share in South Korea to General Motors Corp. In the U.S., its most profitable overseas market, its lost sales to Toyota Motor Corp. because a 4 percent appreciation in the won has made Korean-built vehicles more expensive. Chairman Chung Mong Koo must also contend with an appeal against a three-year prison sentence.
``Hyundai Motor's sales are under huge pressure at home and overseas,'' said Lim Chang Gue, who manages about $950 million including Hyundai Motor shares at Samsung Investment Trust Management Co. in Seoul. ``I don't see any good news in terms of sales growth on the horizon.''
The automaker's first-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, declined 13 percent to 291.4 billion won.
Chung, currently free on bail, is due to appear in court on May 22, as he appeals his conviction in February on charges of embezzlement and breach of trust. He was arrested in April last year and spent two months in jail before his original trial.
Chung's detention and overseas travel bans against him and other executives have hindered Hyundai Motor's expansion plans. Construction of a new plant in the Czech Republic was delayed about a year before work started last month.
The legal problems have contributed to a 24 percent decline in the value of Chung's listed holdings. Chung's shares in Hyundai Motor, Hyundai Mobis Co., Glovis Co. and other companies were worth 2.05 trillion won at the end of 2006, compared with 2.69 trillion a year earlier, according to South Korea's stock exchange.
Shares of Hyundai Motor rose 3.5 percent to 61,400 won at 2:06 p.m. in Seoul. The stock has fallen 24 percent over the past year, while the benchmark Kospi index has risen 8.2 percent.
Hyundai Motor expects to boost sales 14 percent this year to 42.3 trillion won, it said on Jan. 2. Output, including overseas plants, may climb 9.4 percent to 2.74 million units.
Sales from Hyundai Motor's South Korean plants fell 7.4 percent in the first quarter to 387,463 vehicles, as workers staged stoppages and rejected overtime because of a pay dispute. Sales from plants in China, India, Turkey and the U.S. rose 9.3 percent to 227,235 units.
Hyundai Motor's first-quarter vehicles sales in South Korea were little changed at 142,667. GM Daewoo Auto & Technology Co., a South Korean unit of GM, boosted its first-quarter vehicle sales in the country by 30 percent on demand for Tosca midsize sedans and other models.
In the U.S., Hyundai Motor's sales fell 4.6 percent last month, led by a 34 percent decline in Sonata sedan sales. First- quarter sales fell 1.7 percent as the carmaker cut lower-profit sales to rental companies. The stronger won made Korean exports more expensive and cut the repatriated value of Hyundai Motors' overseas sales, which accounted for 57 percent of revenue last year.
Toyota, Japan's largest automaker, boosted U.S. sales 11 percent in the three months ended March, helped by a weaker yen. The Japanese currency averaged 119.4 yen to dollar in the period, 2.1 percent weaker than a year earlier.
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