Hyundai Motor has posted a 21% year-on-year decline to net profit in the first quarter of the year as it was hit by slower sales in China. Results were also dented by recall costs in North America.

First quarter net profit was KRW1.4 trillion (-21%), while operating profit was down 6.8% at KRW1.25 trillion.

Hyundai said that improved product mix helped to mitigate the decline in sales volume. The company posted first-quarter revenue of KRW23.37 trillion compared to KRW22.35 trillion in the same period in 2016.

In the first quarter of 2017, Hyundai Motor’s global sales totalled 1.09 million units compared with 1.11 million units in the same period last year due to weak sales in emerging markets including China.

Hyundai said that while uncertainty in business environment is likely to continue for the time being, an ‘enhanced product line-up including new small SUV and Genesis brand models are expected to help the company regain sales momentum going forward, which will lead to a gradual recovery in earnings’.

Developments in China’s market have become an increasing concern for Hyundai-Kia. Hyundai Motor’s shares have been under pressure recently due to concerns about prolonged weakness in China, its biggest market, as Beijing institutes a campaign against South Korean brands over its government’s planned deployment of a US anti-missile system. Analysts also say that domestic makers in China are taking advantage of anti-Korean sentiment to boost their share of key segments.

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Hyundai and Kia saw their combined China sales slump by 52% in March from a year earlier.

See also: Hyundai Motor exec visits crisis-hit China JV operations