Hyundai Motor has beaten analysts’ expectations by more than doubling its quarterly operating profit and has predicted higher 2008 margins due to growing sales and a weaker Korean won.
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“Hyundai’s outlook is extremely positive this year, as the won has fallen sharply against the Japanese yen, and the new premium sports sedan, the Genesis, has drawn hot reaction from consumers in the first month of its launch,” Estar Investment Advisors’ chief investment officer Chung Kyun-sik told Reuters on Thursday.
The automaker posted a 636.5bn won ($670.2m) operating profit for the three months to 31 December, beating a 473bn won profit forecast by 11 analysts polled by Reuters and the year ago figure of 306.7bn won. Sales rose to 8.74 trillion won from 7.58 trillion in 2006.
Hyundai’s operating profit for 2008 was seen up 7.2% to 1.95 trillion won from 1.82 trillion won in 2007, a poll of Reuters Estimates showed.
According to Reuters, Hyundai said in a statement it would achieve a 6.5% operating profit margin or above in 2008 after posting 6% in 2007 and 4.5% in 2006.
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By GlobalDataNet profit for the October-December quarter was at 338bn won, below the 501.2bn won profit forecast in the Reuters poll and the revised 486.8bn a year ago.
Net profits were dented by a 56bn won loss from derivatives mostly related to shares in affiliate Kia Motors, which fell 18.9% in the fourth quarter. Its corporate tax during the quarter also jumped to 170bn won from about 60bn a year ago, Reuters noted, adding that annual net profit was 1.68 trillion won.
Analysts told the news agency that investors remain concerned over Hyundai’s growth in the United States and China, which have been hit respectively by a weak economy and tough competition. High prices of oil and raw materials are another concern.
Reuters said that Hyundai is targeting a 20% rise in 2008 sales to 3.11m vehicles, banking on new overseas factories and models including the Elantra car and Tucson small SUV driving demand though analysts believe that target is too aggressive and expect Hyundai to sell 2.7m-3m units in 2008.
“Global auto demand is still sluggish amid the growing gloomy outlook for the world economy. Hyundai has a high hope on the Genesis and a new factory in China, but it is unclear if they will boost Hyundai’s sales,” Daeshin Securities analyst Kim Byung-kuk told Reuters.
Reuters added that a weaker won is expected to help Hyundai score price competitiveness gains against Japanese makers battling a stronger yen this year despite a potential slowdown in the global economy and high raw material and oil prices while new factories in China and India are likely to lift sales overseas.
New models, including its Genesis top-end sedan, and cost-saving efforts are also expected to help, especially in the higher-margin domestic market, of which Hyundai controls about half, the report added.
