SEOUL, April 27 (Korea Bizwire) – Global ratings agency Moody’s Investors Service said Thursday it will maintain the current Baa1 rating for Hyundai Motor Co., South Korea’s top automaker, despite its weak first-quarter earnings.
On Wednesday, the carmaker reported a 21-percent on-year drop in first-quarter net profit due to weak sales in China and emerging markets. Its net income fell to 1.41 trillion won from 1.77 trillion won a year earlier.
“Hyundai Motor’s profitability for Q1 2017 weakened moderately year-on-year, mainly owing to sluggish growth in auto shipments, continued intense competition in the global auto market and provision expenses related to its recall,” Moody’s Vice President and Senior Credit Officer Yoo Wan-hee said in a statement.
The carmaker’s unadjusted operating margin fell to 5.6 percent in the first quarter from 6.1 percent a year earlier. The won’s appreciation against the dollar also negatively affected the margin, he said.
Moody’s expected the political tension between Korea and China over the deployment of the Terminal High Altitude Area Defense system in South Korea will persist at least over the next few months.
Hyundai’s net income will likely weaken moderately in 2017 owing to sluggish sales in China, the ratings firm said.
Hyundai and its affiliate Kia Motors Corp. together aim to sell 8.25 million vehicles this year, up from 7.9 million autos sold globally last year.