SOUTH KOREA: Hyundai Motor Q1 profit misses target
A 28% year-on-year increase in Q1 profit for Hyundai Motor was not enough to please analysts as it missed forecasts on the back of foreign exchange losses and higher raw material costs. Its share price fell back after the profit announcement.
Reuters reported that while a weaker won helped boost export sales it also contributed to steeper prices for inputs such as steel and rubber, and led to losses on currency derivatives.
Hyundai Motor posted a first quarter net profit of 392.7 billion won (USD396m), missing a 559.2 billion won forecast, the average from 10 analysts in a Reuters poll.
"The (positive) impact of a weaker won should not be exaggerated, as it boosts raw material import costs and as Japanese makers have more overseas factories than Hyundai," Kim Jae-woo, an auto analyst at Mirae Asset Securities told Reuters.
The report said that one bright spot is seen coming from demand for the automaker's more upmarket models such as the new Genesis sedan, especially in the higher-margin domestic market of which Hyundai has half.
For 2008, Hyundai Motor is expected to post a 31.6% rise in net profit to 2.21 trillion won, according to a poll of 23 brokerages by Reuters Estimates.
Hyundai said it was considering sourcing steel from China for auto production in South Korea to keep costs down.
"If Chinese steel is cheap and of good quality, we may consider buying steel from China," Park Dong-wook, a director at Hyundai's treasury division, told reporters and analysts.