Contact Us

Home> International News> News detail

Strong won sets Hyundai on on profit fall

Seonjin Cha From Shanghai Daily| January 26,2007

HYUNDAI Motor Co, South Korea's largest auto maker, said fourth-quarter profit fell after sales of Sonata sedans declined and a stronger won eroded overseas earnings.

Net income dropped 22 percent to 537 billion won (US$573 million) in the three months ended December, from a revised 691 billion won a year earlier, the Seoul-based car maker said yesterday. That compares with the median estimate of 440 billion won from nine analysts surveyed by Bloomberg News. Sales fell 6.6 percent to 7.58 trillion won from 8.12 trillion won.

The won climbed to a nine-year high in the quarter, hurting the car maker's earnings by cutting the repatriated value of exports and making its vehicles more expensive overseas. By contrast, Toyota Motor Corp and other Japanese car makers are benefiting from a weaker yen, making their cars more competitive.

"There's no positive news for Hyundai this year," said Hyun Hye-jung, an analyst at Woori CS Asset Management Co in Seoul. "The won is exerting pressure, sales in the US are weak and margins in China are being squeezed."

The won was 10.5 percent higher against the dollar in the fourth quarter compared with a year earlier. In contrast, the Japanese yen was 0.5 percent weaker against the dollar.

A stronger won increases the price of Hyundai Motor's exports, which accounted for about 57 percent of the car maker's sales last year.

The won's gain has forced Hyundai Motor to raise the price of its revamped Accent subcompact twice since September last year, making it 5.4 percent more expensive than Toyota's Yaris subcompact in the US.

Operating profit fell 8.6 percent in the fourth quarter to 307 billion won, Hyundai Motor said.

"It's very bad," said Kim Young-il, who oversees about US$1.1 billion in equities as chief investment officer at Hanwha Investment Trust Management Co in Seoul. "Investors will ask themselves if Hyundai can stay competitive in such a challenging environment."

All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us:

Install Gasgoo APP

Anytime and anywhere to know the dynamics of China's auto industry

Hot Auto Products| e-Catalog| Auto Products Directory| Auto Parts Manufacturers|

Gasgoo Site: Automotive News| 中文站| 汽车资讯| 出口供应商| 汽车社区|

Copyright Notice © 2016 Corporation and its licensors. All rights reserved.