SEOUL, South Korea – Hyundai Motor Co. has reported a 12 per cent drop in its first-quarter net profit as lower sales in China, Russia and Brazil outweighed higher vehicle shipments at home and favourable foreign exchange rates.
South Korea’s largest automaker said its January-March net income was 1.7 trillion won ($1.5 billion), compared with 1.91 trillion won a year earlier.
The results were better than expected: Analysts expected 1.53 trillion won, according to FactSet, a financial data provider.
But the company reported a year-over-year earnings drop for a ninth consecutive quarter.
The company blamed weak demand in emerging markets and oil-exporting countries. But the results could reaffirm concerns about its competitiveness in China, the world’s largest auto market.
Last year, the rise of Chinese local brands and Chinese consumers’ preference for sports utility vehicles over sedans took a toll on Hyundai and other foreign car makers. The popularity of SUVs in China was not favourable to the South Korean company, whose forte is in passenger sedans such as the Elantra and Avante models.
During the first three months of this year, Hyundai’s plants in China, which is the second-largest production base for Hyundai after South Korea, reported an 18 per cent decline in sales. Exports from South Korean plants to overseas dropped while sales in Russia and Brazil fell about 20 per cent each.
Sales rose 7 per cent while operating profit dropped 16 per cent. The maker of the Genesis and Sonata sedans has seen its operating income fall year-on-year for the past seven quarters.