Hyundai misses profit estimates for fourth quarter image

Hit by a stronger local currency and slumping sales at home, South Korea’s Hyundai Motor posted its first year-on-year fall in quarterly revenue in nearly three years.

Hyundai, the world’s fifth-biggest automaker along with sister affiliate Kia Motors, has endured a tough year, marked by lackluster performances in the United States and Europe, a string of recalls and a management reshuffle.

Hyundai concedes global sales growth will slow to 4 % this year from 7 % last year, even as it plans to launch a revamped version of its popular Sonata sedan. Overall, it aims to sell 4.9 million vehicles in 2014.

The carmaker posted a revenue of 21.94 trillion Korean won ($20.56 billion) in the October to December period, a 3 % fall from a year earlier. This marked its first year-on-year fall since at least 2011 when new accounting methods were adopted.

“Currency fluctuations – the won’s strength coupled with the yen’s weakness – weighed on our earnings,” Hyundai said in a statement.

The South Korean won gained 3 % against the dollar and surged 27 % versus the Japanese yen in the fourth quarter from a year earlier, reducing the value of Hyundai Motor’s overseas revenue in local currency terms and lifting Japanese rivals’ price competitiveness in the United States and other key export markets.

Hyundai has not announced new plant plans in recent years, opting for squeezing out more vehicles from existing plants. This allowed the automaker to run factories at full capacity globally and achieve an industry-leading margin of 9.5 % last year, but sales growth slowed down.

As the South Korean automaker hopes to increase its China sales by more than 10 % in 2014, its chief financial officer said Hyundai plans to roll out a small sport utility vehicle (SUV) in China this year. Lee Won-hee said the new model will be smaller than its Tucson compact SUV.

He also said Hyundai aims to sell more than 1.13 million vehicles in China, helped by a capacity increase at its third Chinese plant and its new commercial vehicle factory there. Last year, Hyundai sold 1.03 million vehicles in China, up 21 % from the previous year.

Via Reuters