China crisis, strong won wipes 25% off Hyundai Q3 net profit

GMT 09:01 2015 Thursday ,22 October

Arab Today, arab today China crisis, strong won wipes 25% off Hyundai Q3 net profit

Hyundai Motor
Seoul - AFP

The painful slowdown in Chinese economic growth and a stronger South Korean won slashed Hyundai Motor's net profit by a quarter over the past three months, the firm said on Thursday.

The firm -- which along with its smaller affiliate Kia Motors forms the world's fifth-largest carmaking group -- also indicated China's ongoing malaise and a sketchy US economic outlook would pose problems.

In the July-September period Hyundai said net profit came in at 1.2 trillion won ($1.05 billion), down 25 percent from a year earlier and well short of the 1.57 trillion won average of analysts' estimates tallied by Bloomberg News.

The sharp fall came as operating profit slipped 8.8 percent on-year to 1.5 trillion won but sales rose 10.1 percent to 23.4 trillion won.

"Operating costs rose as we spent more on marketing and promotions against competitors that took advantage of the weaker yen and euro to expand their presence in major markets including the US," it added.

However, a rally in the won against the euro, Japanese yen and Brazilian real blunted the firm's price competitiveness in those markets, it said.

The company sold 1.12 million cars worldwide during the third quarter, down 0.6 percent from a year ago.

The number of vehicles sold in China -- the world's biggest car market -- slid 17.4 percent during the same period, while the number tumbled nearly 10 percent in Brazil.

The company warned of "many challenges" ahead with continuing slower growth in China and uncertainties about the US economic outlook.

But it still expected demand to pick up in the fourth quarter following the launch of the new versions of its flagship sports utility vehicles, Hyundai chief financial officer Lee Won-Hee said.

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