Hyundai Motor Posts Surprise Profit Rise

SEOUL November 11, 2003; Reuters reported that South Korea's top auto maker Hyundai Motor Co reported a surprise 1.7 percent rise in quarterly profits on Tuesday, boosted by sales of high-end cars such as its New EF Sonata mid-sized sedan and Santa Fe sport utility vehicle.

The market had expected poor domestic sales, a month-long strike and a rising won currency to squeeze profits in the third quarter, although analysts have said solid overseas demand for new models should put Hyundai on track to meet 28 trillion won ($23.85 billion) of sales this year.

Local consumption has been hit by a government crackdown on credit card debt and an uncertain domestic economic outlook.

Hyundai, 10-percent owned by U.S.-German auto maker DaimlerChrysler AG, posted a net profit of 301.7 billion won for the third quarter, compared with a profit of 296.2 billion won a year ago.

Sales fell 19 percent to 5.05 trillion won.

The profit came well above the average analyst forecasts of a 247.3 billion won net profit, while sales were below forecasts of 5.38 trillion won.

"Good sales of high-end cars bolstered profit margins," said Park Sang-woo, a Hyundai Motor spokesman.

The earnings came after Japanese rivals reported robust earnings last week. Toyota Motor Corp, Japan's top auto maker, posted a surprise 7.4 percent jump in six-month profit. Smaller Mazda Motor Corp reported a doubling in first-half profits on good European sales.

Hyundai has already said its exports, which make up 60 percent of its earnings, declined 15 percent in the third quarter. It ranks seventh in U.S. sales with a 2.5 percent market share, just after Nissan Motor Co and above Mitsubishi Motors Corp

But the South Korean auto maker had its best monthly exports record in October -- a 28 percent jump from a year ago.

Domestic sales slumped 33 percent during the third quarter to about 136,000 vehicles as a government crackdown on credit card debt and an uncertain domestic economic outlook sapped consumer appetite for spending.

In addition, a seven-week strike cost Hyundai $1.2 billion in lost output, while a 3.4 percent climb in the won currency against the dollar during the quarter decreased the value of its overseas revenues.

Shares in Hyundai Motor, the country's seventh biggest stock with a market value of 9.4 trillion won, have risen 54 percent this year, almost double the main board's 28 percent climb.

The stock fell nearly two percent to 41,850 won at 8:06 p.m. EST, underperforming the main bourse's 1.20 percent decline.

Hyundai controls 42 percent of South Korea's automobile market, while affiliate Kia Motors Corp, the country's second-largest auto maker, accounts for 27 percent