Seoul - South Korean auto giant Hyundai Motor Co posted a modest profit gain following third consecutive quarters of decline as strong sales in China and Brazil countered lacklustre performances at home and in the United States.
The 3.9 percent year-on-year growth in the quarter ended September puts Hyundai Motor on a recovery track, although rising competition and a firming local currency are obstacles that it would still have to overcome.
Hyundai Motor, once a stellar performer in the global auto industry, has seen its US market share shrink as a weaker yen gives Japanese cars a leg-up.
The South Korean firm is also being squeezed by the growing popularity of BMW and Volkswagen models in its home market in the wake of bilateral trade deals.
Hyundai Motor, the world's fifth-biggest carmaker along with affiliate Kia Motors Corp, said on Thursday net profit rose to 2.3 trillion won ($2.18 billion) in July-September.
That was slightly above an average forecast of 2.17 trillion won, according to Thomson Reuters I/B/E/S.
Sales were helped by increased output in Brazil and China after Hyundai Motor set up new factories there.
It also benefited from anti-Japan sentiment that broke out last year in China, the world's biggest auto market, after a diplomatic row with Japan over disputed islands.
Analysts expect Hyundai Motor's earnings to rebound in the fourth quarter. Its profit a year earlier was hammered by a costly recall in the United States.
That rebound will set the stage for a moderate recovery next year driven by new models such as Sonata and the Genesis.
But Hyundai Motor warned that uncertainties in the global economy could still spoil the show.
“The global vehicle market will grow less than expected in the fourth quarter, because of a delay in the recovery of US, and other advanced economies, and concerns about slowing demand in emerging markets,” Hyundai Motor said in a statement.
Hyundai Motor has also been knocked by unfavourable currency movements.
The South Korean won has strengthened about 13 percent against the yen so far this year, giving Japanese rivals a bigger competitive edge.
Hyundai Motor increased sales incentives in the United States and South Korea in the third quarter to woo customers away from rivals and to boost demand for its aging models, analysts say.
US incentive spending jumped 76 percent to $1,926 per sale in September from a year earlier, although that is lower than the industry average of $2,363 per vehicle, according to auto information provider Edmunds.com.
Hyundai plans to launch a new, significantly redesigned version of its Genesis large car and a revamped Sonata mid-sized sedan in the US next year.
“With important 2014 redesigns of the Genesis and Sonata coming, Hyundai can expect a reduction in incentives,” Edmunds.com analyst Jeremy Acevedo said in an emailed statement to Reuters.
Hyundai Motor shares ended down 1.9 percent to 253,500 won in Seoul trading on Thursday after jumping 16 percent over the past three months on hopes the upcoming models Genesis and Sonata may help revive earnings growth.
Brokerages such as Macquarie Securities and BNP Paribas this month raised the target share price of Hyundai Motor.
Total vehicle shipments climbed 11 percent to 1.1 million in the third quarter as labour strikes at home were offset by increased production in China and Brazil.
Hyundai Motor will try to exceed its goal of raising global vehicle sales by 6 percent to 4.66 million vehicles this year, Kim said.
Hyundai Motor's labour union in South Korea staged partial strikes in August and September during wage talks, but caused less production loss compared with last year.
The union plans to select a new leader in early November to replace the current hardline chief, who last year led the automaker's first strike in four years.
Next year, Hyundai Motor's production capacity will grow only 5.6 percent to 4.91 million vehicles, Kim Yeung-tae, vice president of Hyundai Motor, said during a conference call on Thursday. It reiterated that there is no plan to build new factories. - Reuters