Hyundai Motor Co warned of increasing uncertainties with the spread of trade protectionism and intensifying competition, even as South Korea’s largest automaker reported a 33 percent decline in operating profit due to labor strife and a fall in emerging markets demand.
Operating profit at the Seoul-based company fell to 1.02 trillion won (US$874.55 million) in the fourth quarter of last year, missing the 1.45 trillion won average analyst estimate compiled by Bloomberg. Net income declined for a 12th consecutive quarter.
Hyundai Motor would continue to monitor the policies of US President Donald Trump’s administration, which are expected to put pressure on countries that have trade surpluses with the US, Hyunda Motor vice president Koo Zayong said yesterday during a conference call.
He reiterated the plan by Hyundai Motor to invest US$3.1 billion in the US with affiliate Kia Motors Corp in the next five years.
Hyundai Motor’s spending on incentives in the US, its second-biggest market, increased at a faster pace than the industry average last month, according to researcher Autodata Corp.
Warranty expenses rose due to a weaker won, eroding operating profit.
The US business environment will be tough this year because sports utility vehicle (SUV) sales will probably slow and rising interest rates will hurt demand, Koo said.
The company’s deliveries in South Korea plunged in the quarter after a series of partial stoppages escalated into a full-scale strike in September last year and the expiry of a tax cut damped demand.
The automaker also faces consumer confidence running near an eight-year low and no early end in sight to the presidential and corporate scandals. The nation’s GDP data released on Tuesday showed an expansion of just 0.4 percent in the fourth quarter of last year, the weakest quarter-on-quarter performance since June 2015.
Demand in China would probably slow this year on an increase in the sales tax, Koo said.
Hyundai Motor expects industry sales in its largest market to slow to a 5 percent gain this year amid more intense competition. The automaker’s SUV sales rose 43 percent last year in the country, outpacing the 3 percent growth in sedan deliveries.
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