SEOUL, Apr. 24 (Korea Bizwire) — Hyundai Motor Co. said Wednesday it posted a 30 percent on-year jump in its first-quarter net profit helped by strong demand for new SUVs and a weaker won.
Net profit for the January-March period rose to 954 billion won (US$830 million) from 732 billion won a year earlier, Hyundai said in a statement.
The net result was higher than the median forecast of 762 billion won by local brokerages.
“Robust domestic sales of the flagship Palisade SUV and the Santa Fe SUV helped buoy the quarterly bottom line,” Senior Vice President Heo Byung-gil, in charge of Hyundai’s sales promotion division, said in a conference call about the quarterly results.
Hyundai launched the all-wheel drive, three-row Palisade in December after launching the all-new Santa Fe in February. The carmaker plans to begin selling the Palisade in the United States in the third quarter of 2019.
Hyundai’s improved SUV lineup, now composed of the subcompact Kona, compact Tucson, midsize Santa Fe and Palisade, comes after years of requests from the markets for the company to reduce its heavy reliance on sedans.
“To grasp growing demand for SUVs, Hyundai plans to add the luxury Genesis GV80 SUV and the entry-level Venue SUV to the lineup later this year, along with the Genesis G80 sedan,” the executive vice president said.
On top of an improved product mix, the weakening of the won against the dollar and decreased spending on incentives in the U.S. also helped the bottom line, he said.
The won weakened to an average of 1,125.08 against the dollar in the first quarter from 1,072.29 a year ago. A weaker won drives up the value of dollar-denominated earnings when carmakers convert them into the local currency.
Still, rising investment in research and development activities and the won’s strength against emerging market currencies kept the quarterly earnings from improving further.
Analysts said Hyundai’s earnings will improve further in the second quarter, though its improvement largely depends on external market conditions.
“Hyundai plans to increase the production of the Palisade by 15,000 units to meet orders. The all-new Sonata sedan went on sale this month. Strong sales of new models will likely to improve profitability this year,” Kim Jin-woo, an analyst at Korea Investment & Securities Co., said.
Hyundai sold 18,000 Palisades in the domestic market in the first quarter.
But potential U.S. tariffs on vehicle imports and a U.S. investigation over how the carmaker handled a recall following a series of engine fires there remain uncertain factors, he said.
Hyundai’s global sales in the first three months fell 2.7 percent to 1,021,377 vehicles from 1,049,389 units a year ago as lackluster overseas sales offset strong domestic sales.
Sales in the world’s two biggest markets remained weak. First-quarter sales in the U.S. fell 2.5 percent on-year to 198,000 autos and sales in China plunged 19 percent to 131,000 units. Hyundai is considering stopping production at its No. 1 Beijing plant, one of its five plants in China, due to a low utilization rate.
The company’s operating income climbed 21 percent to 825 billion won in the first three months from 681.3 billion won a year earlier. Sales were up 6.9 percent to 23.99 trillion won from 22.44 trillion won during the same period.
On Wednesday, shares of Hyundai rose 1.84 percent to 138,500 won, outperforming the broader KOSPI’s 0.9 percent loss. The stock has risen 17 percent this year through Wednesday.