Hyundai Motor is expected to post a two-thirds jump in fourth quarter profits on Thursday as recovering domestic demand boosts sales of premium models and steel prices stabilise.
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Reuters said Hyundai, which controls half the South Korean market and sells two thirds of its vehicles abroad, is likely to see earnings improve further in 2006 on higher prices and strong sales of top-end models such as the TG Grandeur, even though export sales may be dampened by a soaring won currency.
“New models will help boost sales in overseas markets this year as they did at home last year,” Stephen Ahn, an analyst at Woori Investment and Securities, told the news agency.
Hyundai is expected to earn a net 641.9 billion won in the fourth quarter of 2005, up 67% from 384.6 billion a year ago, and up 20% higher from 534.9 billion in the previous quarter, according to seven analysts polled by Reuters.
The company paid 196.2 billion in additional corporate taxes in December following a tax probe, but a rise in sales will have more than offset that one-off cost, analysts reportedly said.
It is banking on the TG Grandeur, which has seen strong local sales since a debut in May, to repeat its success abroad. It also has high hopes for a new version of its Santa Fe sport utility vehicle, launched in December, Reuters noted.
A stronger won poses a threat to Hyundai as the value of exports is cut when converted into the local currency, the report added.
Nevertheless, in 2006, Hyundai is expected to post 2.59 trillion won ($2.63 billion) in net profit, up 16% from the estimated 2.23 trillion in 2005, according to Reuters Estimates.
