Hyundai Q4 profit jumps; Genesis brightens outlook
01-24-2008, 08:30 AM
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Hyundai Q4 profit jumps; Genesis brightens outlook
http://www.autonews.com/apps/pbcs.dll/arti.../714961554/1117
January 24, 2008 - 3:30 am ET
SEOUL (Reuters) -- Hyundai Motor Co. beat expectations with a more than doubling of fourth-quarterly operating profit and predicted higher 2008 margins, fuelled by growing sales and a weaker won.
Despite a potential slowdown in the global economy and high raw material and oil prices, a weaker won currency is expected to help South Korea's top automaker score price competitiveness gains against Japanese makers battling a stronger yen this year. New factories in China and India are likely to lift sales abroad.
New models, including its Genesis top-end sedan, and cost-saving efforts are also expected to help, especially in the higher-margin domestic market, of which Hyundai controls about half.
"Hyundai's outlook is extremely positive this year, as the won has fallen sharply against the Japanese yen, and the new premium sports sedan, the Genesis, has drawn hot reaction from consumers in the first month of its launch," said Chung Kyun-sik, Chief Investment Officer, Estar Investment Advisors.
Hyundai, the world's No. 6 automaker along with affiliate Kia Motors Corp., posted a 636.5 billion won ($670.2 million) operating profit in three months to Dec. 31.
That beat a 473 billion won profit forecast by 11 analysts polled by Reuters and the year ago figure of 306.7 billion won.
Sales rose to 8.74 trillion won from 7.58 trillion won a year ago.
Hyundai's operating profit for 2008 was seen up 7.2 percent to 1.95 trillion won from 1.82 trillion won in 2007, a poll of Reuters Estimates showed.
"In order to obtain a fruitful outcome, we will put our focus on stepping up marketing capacity and exploring new markets," Hyundai said in a statement.
"We will achieve a 6.5 percent operating profit margin or above in 2008." The company had operating profit margin of 6 percent in 2007 and 4.5 percent the year before.
TAX, DERVIATIVES HIT NET
Hyundai's net profit during the October-December period came in at 338 billion won, below 501.2 billion won profit forecast in the Reuters poll and the revised 486.8 billion a year ago.
Net profits were dented by a 56 billion won loss from derivatives mostly related to Kia shares, which fell 18.9 percent in the fourth quarter. Its corporate tax during the quarter also jumped to 170 billion won from about 60 billion a year ago.
Annual net profit was 1.68 trillion won.
Investors remain concerned over Hyundai's growth in the United States and China, the world's two biggest auto markets, which have been hit respectively by a weak economy and tough competition. High prices of oil and raw materials are another concern, analysts said.
Hyundai is targeting a 20 percent rise in 2008 sales to 3.11 million vehicles, banking on new overseas factories and models including the Elantra and the Tucson, a smaller SUV, driving demand.
But analysts believe that target is too aggressive and expect Hyundai to sell 2.7 million-3 million units in 2008.
"Global auto demand is still sluggish amid the growing gloomy outlook for the world economy. Hyundai has a high hope on the Genesis and a new factory in China, but it is unclear if they will boost Hyundai's sales," said Kim Byung-kuk, an analyst at Daeshin Securities.
QUOTE
January 24, 2008 - 3:30 am ET
SEOUL (Reuters) -- Hyundai Motor Co. beat expectations with a more than doubling of fourth-quarterly operating profit and predicted higher 2008 margins, fuelled by growing sales and a weaker won.
Despite a potential slowdown in the global economy and high raw material and oil prices, a weaker won currency is expected to help South Korea's top automaker score price competitiveness gains against Japanese makers battling a stronger yen this year. New factories in China and India are likely to lift sales abroad.
New models, including its Genesis top-end sedan, and cost-saving efforts are also expected to help, especially in the higher-margin domestic market, of which Hyundai controls about half.
"Hyundai's outlook is extremely positive this year, as the won has fallen sharply against the Japanese yen, and the new premium sports sedan, the Genesis, has drawn hot reaction from consumers in the first month of its launch," said Chung Kyun-sik, Chief Investment Officer, Estar Investment Advisors.
Hyundai, the world's No. 6 automaker along with affiliate Kia Motors Corp., posted a 636.5 billion won ($670.2 million) operating profit in three months to Dec. 31.
That beat a 473 billion won profit forecast by 11 analysts polled by Reuters and the year ago figure of 306.7 billion won.
Sales rose to 8.74 trillion won from 7.58 trillion won a year ago.
Hyundai's operating profit for 2008 was seen up 7.2 percent to 1.95 trillion won from 1.82 trillion won in 2007, a poll of Reuters Estimates showed.
"In order to obtain a fruitful outcome, we will put our focus on stepping up marketing capacity and exploring new markets," Hyundai said in a statement.
"We will achieve a 6.5 percent operating profit margin or above in 2008." The company had operating profit margin of 6 percent in 2007 and 4.5 percent the year before.
TAX, DERVIATIVES HIT NET
Hyundai's net profit during the October-December period came in at 338 billion won, below 501.2 billion won profit forecast in the Reuters poll and the revised 486.8 billion a year ago.
Net profits were dented by a 56 billion won loss from derivatives mostly related to Kia shares, which fell 18.9 percent in the fourth quarter. Its corporate tax during the quarter also jumped to 170 billion won from about 60 billion a year ago.
Annual net profit was 1.68 trillion won.
Investors remain concerned over Hyundai's growth in the United States and China, the world's two biggest auto markets, which have been hit respectively by a weak economy and tough competition. High prices of oil and raw materials are another concern, analysts said.
Hyundai is targeting a 20 percent rise in 2008 sales to 3.11 million vehicles, banking on new overseas factories and models including the Elantra and the Tucson, a smaller SUV, driving demand.
But analysts believe that target is too aggressive and expect Hyundai to sell 2.7 million-3 million units in 2008.
"Global auto demand is still sluggish amid the growing gloomy outlook for the world economy. Hyundai has a high hope on the Genesis and a new factory in China, but it is unclear if they will boost Hyundai's sales," said Kim Byung-kuk, an analyst at Daeshin Securities.
