Hyundai Motor revealed a promising outlook for sales in South Korea and in the United States, and also reported its first increase in profit in five quarters, in an early indication of recovery even as it battles a decline in China.
This comes as Hyundai’s heir apparent Euisun Chung reshuffles top management to restore stalled growth at the automaker – once hailed as a star performer during the worldwide financial crisis about a decade ago.
Hyundai is now presenting a full line-up of sport utility vehicles (SUVs) this year after a consumer transition to the sector took a toll on its sedan-heavy line-up.
In the quarter ended March, Hyundai gained a better-than-expected 24 percent increase in net profit to 829 billion won ($722 million), against an eight-year low plumbed a year ago, its first year-on-year rise since end 2017.
That beat an average estimate of 758 billion profit from 15 experts polled by Refinitiv.
Its operating profit increased 21 percent to 825 billion won and revenue climbed 7 percent to 23.99 trillion won, as its South Korea sales hit a 17-year high and U.S. sales increased for the first tine since 2016.
“We will try to sustain our profit improvements driven by new models,” CFO Choi Byung-chul stated on an earnings call on Wednesday, adding Hyundai is motivated for an operating margin of over 4 percent this year against 2.5 percent last year.
He also stated Hyundai had decided to postpone its oldest plant in China to better manage its massive overcapacity there and reply Beijing’s attempts to tackle pollution.
“The Chinese market is not in a favorable condition.”
Hyundai’s first-quarter sales in China declined 19 percent to the lowest since 2009, hit by the lack of attractive models and strong branding amid competition from regional and global competitors.
An overall decline in auto sales in China in the quarter, after contracting in 2018 for the first time in nearly three decades, further pushed Hyundai’s sales in China.