By Heekyong Yang
SEOUL (Reuters) -South Korea’s Hyundai Motor Co reported a record high quarterly profit and revenue for the three months ended June, beating forecasts, as favourable exchange rates and strong sales of high-margin sport utility vehicles boosted earnings.
The automaker, however, warned of an uncertain outlook due to intensifying price competition as inflation and high interest rates squeeze consumers.
“As consumer demand for autos is weakening, we expect there will be more competition and the amount of incentives is also likely to increase… creating a tougher business outlook,” it said in an earnings release.
Hyundai Motor, which together with its affiliate Kia Corp is the world’s No.3 automaker by sales, reported a net profit of 4 trillion won ($2.89 billion) for the April-June period, up from 3.2 trillion won in profit a year earlier.
That compared with an average profit forecast of 3.4 trillion won from 21 analysts compiled by LSEG SmartEstimate, which is weighted towards estimates from analysts who are more consistently accurate.
The net profit was its highest quarterly since the previous record high set in the Q2 2022.
Japanese rival Nissan Motor saw its first-quarter profit almost completely wiped out on Thursday, and slashed its annual outlook, as deep discounting in the United States shredded the company’s margins.
Hyundai outperformed some of its rivals including EV leader Tesla and other legacy auto makers such as Ford by boosting sales of premium SUV models and hybrid vehicles in the U.S., a move that also helped it offset a prolonged sales weakness in the domestic market.
Domestic vehicle sales in South Korea, Hyundai’s second-biggest market, slumped 10% in the second quarter, extending from a 16% drop in the previous quarter, as consumers continue to grapple with surging inflation and a weak economy.
Its vehicle sales in the U.S. edged up 2.2% in the second quarter. High-margin SUV sales accounted for about 80% of the total while hybrid vehicle sales jumped 42% from the same period a year ago, Hyundai said.
Analysts also said the favourable exchange rate in the second quarter had helped Hyundai’s profit growth.
The won slumped 4.3% against the dollar in the quarter from a year earlier, boosting Hyundai’s repatriated overseas sales and profit.
($1 = 1,385.1200 won)
(Reporting by Heekyong Yang and Joyce Lee; Editing by Himani Sarkar and Miral Fahmy)
