Strong won hits Hyundai profits

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Reuters

File picture: Kim Hong-ji

Seoul -

South Korea's Hyundai Motor on Thursday said first-quarter profit fell 2.9 percent from a year ago, hit by a strong won, and warned of further tightness as the unit damages its overseas competitiveness

Net profit came in at 2.02 trillion won ($1.9 billion) in January-March, the country's largest car maker said in a statement. Sales rose 1.3 percent to 21.6 trillion won and operating profit climbed 3.7 percent to 1.93 trillion won.

The firm said it sold 1.22 million cars globally in the three months, up from 1.17 million from a year ago.

Korea's won has steadily strengthened over the past year against the dollar and the Japanese yen, hitting its highest level against both currencies in about five years.

A strong won weakens the competitiveness of major exporters such as Samsung and Hyundai in overseas markets, and reduces the value of their overseas earnings when repatriated.

The company said the exchange rate would continue to plague its business in the second quarter.

“Competition is expected to further intensify as Japanese rivals, aided by a weak yen, continue to expand global sales efforts and foreign car makers... expand their presence in the domestic market,” it said.

But the upcoming global launch of new models of its flagship sedans such as the Sonata and Genesis will help offset the loss, chief financial officer Lee Won-Hee said.

“We also put in place various contingency plans including cost-cutting measures, so we believe we will be able to well exceed earnings targets for this year,” he said.

Lee said earlier the company planned to sell 4.9 million cars at home and abroad this year, up 3.5 percent from 2013.

Hyundai, along with its smaller affiliate Kia, forms the world's fifth-largest auto-manufacturing group. - Sapa-AFP


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