Hyundai Motor's profit falls to 5-year low despite record sales

SEOUL - Hyundai Motor, South Korea's top automaker, posted the lowest operating profit in five years as sales fell in China, the company's largest market, and currency losses in emerging economies outweighed its record-high revenue and auto sales.

Hyundai said in a statement that it registered 6.36 trillion won ($5.31 billion) in operating profit in 2015, down 15.8 percent from the previous year. The figure was the lowest since a 5.92-trillion-won profit tallied in 2010.

Net profit declined 14.9 percent to 6.51 trillion won last year, but revenue increased 3 percent to a record high of 91.96 trillion won thanks to robust auto sales.

Hyundai's global auto sales reached 4,963,023 units in 2015, the largest annual shipment in the company's history. It was slightly up from the previous year's 4,961,877 units.

Auto sales in South Korea, where Hyundai records a high profit margin, expanded 4.2 percent in 2015 from a year ago, but overseas sales declined 0.6 percent on lower deliveries in China, Hyundai's No1 market by sales.

Overseas plant sales saw a drop in profitability, especially in Russia and Brazil, amid sharp fall in emerging market currencies dragging down profits repatriated into home.

Contributing to the profit fall, Hyundai's investment in research and development rose last year as it spun off the Genesis brand as a standalone luxury unit in November to increase sales of luxury models and enhance profit.

Hyundai said it will sharply expand R&D investment for sustainable growth and secure future competitiveness in technology, while spending more on developing eco-friendly cars. Hyundai launched Ioniq, which only targets the eco-friendly vehicle market, earlier this year.

The company also plans to widen its line-up of sport utility vehicles (SUV), which are seeing rising global demand, and continues to expand the Genesis brand line-up. Hyundai set its 2016 sales target at 4,317,000 units abroad and 693,000 at home.

During the fourth quarter of 2015, Hyundai saw a decline in operating profit on growing revenue and car sales.

Hyundai posted its biggest quarterly revenue of 24.76 trillion won during the October-December period. Its global auto sales recorded 1,425,450 units in the quarter.

Operating profit, however, tumbled 19.2 percent from a year earlier to 1.52 trillion won in the fourth quarter due to unfavorable foreign exchange rates from emerging markets and stiffer competition that caused an increase in marketing costs.

Despite the lower profitability, Hyundai decided to provide shareholders with 3,000 won per equity share as year-end dividend. The company offered 1,000 won per share in interim dividend for the first time in its history.

Hyundai shares closed at 136,000 won in Seoul trading on Tuesday, down 1.09 percent from Monday's close. The benchmark Kospi index shed 1.15 percent.