SEOUL, Oct. 25 (Korea Bizwire) — Hyundai Motor Co., South Korea’s biggest carmaker by sales, said Thursday its third-quarter net profit plunged 67 percent from a year earlier due to the strong won and U.S. recall costs.
Net profit for the three months that ended on Sept. 30 fell to 305.95 billion won (US$269 million) from 939.18 billion won a year earlier, the company said in a statement.
“The quarterly bottom line reflected about 500 billion won worth of one-off costs involving air bag and engine-related recalls in the United States and other safety reinforcement efforts,” Hyundai Motor Executive Vice President Choi Byung-chul said on a conference call after the earnings’ release.
Sales in the U.S. and China remain weak in the third quarter. And the won’s strength against currencies in emerging markets also weighed on the quarterly results, Choi said.
The quarterly announcement caused Hyundai shares to surrender 5.98 percent to fall to 110,000 won, far underperforming the broader KOSPI’s 1.63 percent loss.
To boost sales in the fourth quarter, Hyundai said it will put a bigger focus on promoting its SUV lineup, which is composed of the all-new Santa Fe, the Kona subcompact and the facelifted Tucson in global markets.
But analysts didn’t expect any meaningful rebound in the carmaker’s fourth-quarter results due to rising costs and the won’s strength against major currencies. The dollar rose to 1,121.59 won in the third quarter from 1,132.24 a year earlier, according to the Bank of Korea.
“Hyundai’s net results are likely to suffer in the fourth quarter as the cost of recalling vehicles prone to engine fires while parked and inventory-related expenses in the U.S. will affect the bottom line,” Kang Seong-jin, an analyst at KB Securities Co., said.
The latest tally, in addition, showed the carmaker’s operating profit nosediving 76 percent to 288.93 billion won in the third quarter from 1.204 trillion won a year ago. Sales rose 1 percent to 24.433 trillion won from 24.201 trillion won during the same period.
In the January-September period, net profit fell 43 percent to 1.848 trillion won from 3.259 trillion won a year ago. Operating profit declined 49 percent to 1.921 trillion won from 3.799 trillion won during the cited period. Sales fell 0.4 percent to 71.582 trillion won from 71.875 trillion won.
Hyundai sold 3.32 million vehicles in the first nine months, up 1.2 percent from 3.28 million units in the year-ago period. Early this year, it set a sales target of 4.68 million units for this year.