* Q1 net profit 2.45 trln won vs 2.07 trln forecast
* Q1 operating profit 2.28 trln won; sales 20.16 trln won
* Global auto demand to rise 5.6 pct this year – CFO
* Hyundai shares up 1.75 pct in flat market
By Hyunjoo Jin
SEOUL, April 26 (Reuters) – Hyundai Motor bucked
sluggish markets in Europe and China and boosted sales in the
United States, driving quarterly net profit up by almost a third
to $2.15 billion, its highest since changing accounting methods
a year ago.
The $54 billion South Korean carmaker, which with affiliate
Kia Motors is the world’s fifth largest, said it
expects to beat an aggressive sales target for Europe – of an
increase of 15.4 percent to 465,000 vehicles this year – even
though the market is seen falling 5 percent. Hyundai increased
its European sales by 11 percent last year.
The European car market slid 8 percent in the first quarter,
but Hyundai posted double-digit sales growth helped by new
models such as the revamped i30 compact. French
automakers PSA Peugeot Citroen and Renault
this week reported falls of 7 percent and 8.6 percent
respectively in first-quarter sales as the French market alone
shrank by nearly a fifth.
Shares in Hyundai have risen close to 13 percent this month,
hitting a life high of 269,500 won ($240), while Japanese rivals
Toyota Motor, Honda Motor and Nissan Motor
, as well as Ford, General Motors and
Volkswagen have all fallen.
January-March net profit at Hyundai jumped to 2.45 trillion
won from 1.88 trillion won a year earlier, well ahead of a
consensus forecast of 2.07 trillion won from Thomson Reuters
I/B/E/S.
“There’s no reason why Hyundai can’t continue this upward
trend in the second quarter. The U.S. market looks fine and
although there are slowdown concerns in Europe and China. In
China foreign brands like Hyundai are performing well,” said
Kim Dae-hwan, fund manager at Shinyoung Asset Management.
Once derided for its poor quality, boxy cars, Hyundai, under
Chairman Chung Mong-koo, has moved up the quality ladder and is
envied by rivals for offering stylish models at affordable
prices even during an industry downturn. Its operating margin of
around 10.5 percent is more than four times that of Toyota.
The maker of the Sonata sedan and Elantra compact has also
benefited from a cheaper South Korean won and free trade
deals with Europe and the United States.
After a period of breakneck growth, Hyundai’s engine is
slowing, but not stalling. Net profit is expected to grow 9
percent to a record 8.85 trillion won this year, though that
pace of growth will be just a quarter of last year’s, according
to Thomson Reuters SmartEstimates.
Hyundai’s sales in its home market skidded 7 percent in the
first quarter. A year ago, domestic sales accounted for 16
percent of Hyundai’s total, and the captive market – where 8 out
of every 10 cars is a Hyundai or a Kia – has helped fund the
group’s overseas growth.
U.S., CHINA DRIVE DEMAND
On an earnings call, Hyundai’s chief financial officer Lee
Won-hee said global demand for cars this year would increase by
5.6 percent – more than has generally been forecast – driven by
the United States and China.
“There are few risks for Hyundai’s strong growth momentum,”
said Kang Sun-sik, a fund manager at Woori Asset Management,
which holds Hyundai stock. “Its overall sales remain strong
globally thanks to improving brand and quality, the won is
trading relatively cheap and its key rivals, especially
Japanese, continue to struggle.
“It will take a while for the Japanese to fully recover and,
until then, Hyundai/Kia will probably be the best auto stocks
with a promising earnings outlook.”
Of 51 analysts covering Hyundai, 49 rate the stock a ‘buy’
or ‘strong buy’.
Hyundai increased its Chinese sales in January-March, in a
market that shrank 1.3 percent, analysts have said.
[I D :nL3E8FB1U9] The South Korean firm plans to start productionat new plants in China and Brazil this year, after a new factory
went into production in Russia last year, but it has capped its
global production capacity at 7 million vehicles, saying it
doesn’t want to follow Toyota, once its benchmark, which
suffered from a major recall crisis after it ramped up global
capacity.
In the United States, Hyundai, Ford and others have also
upgraded their 2012 sales goals after an unexpectedly strong
first quarter as drivers finally put the 2008-09 downturn behind
them and began replacing ageing gas guzzlers.
Hyundai increased its U.S. sales by 15 percent in
January-March, edging the overall market’s 14 percent gain, but
its market share slipped to 4.7 percent from 5.1 percent as its
stretched production capacity meant it couldn’t readily boost
output.
Hyundai shares rose 1.75 percent on Thursday in a flat
broader market.
