The largest South Korean automaker, Hyundai Motor, announced a second-quarter profit reduction because of local currency pressure on exports and also further warned of ongoing revenue decay.
Hyundai Motor, the world’s fifth-biggest carmaker when taking into account its affiliate Kia Motors, said its earnings went down the most in the last five quarters, as the won’s jump pressured export earnings. The company said its second-half of the year could be even worse if the currency gain continues and as global demand is forecasted to level off.
The company reported a 2.24 trillion Korean won ($2.18 billion) net profit, which is 7% less than what it reported last year. Reuters’ poll of 16 analysts also had an average prediction of 2.33 trillion won.
“We do not have a positive outlook for the exchange rate in the second half,” Chief Financial Officer Lee Won-hee said in a conference call.
This is the biggest profit downturn since the 16% slump in the first quarter of 2013, when the automaker was hit by worker strikes at home and a massive recall in the US. The company CFO said the automaker is now seeking to further cut costs, buoy the high-earnings premium segment line-up and spur South Korean parts sourcing to levy the currency gains.