Hyundai Motor's H1 profit posts double-digit fall on weak sales in China

SEOUL - Hyundai Motor, South Korea's biggest automaker, posted a double-digit fall in operating profit for the first half of this year due mainly to weak demand from China, the company said Wednesday.

Operating profit tumbled 16.4 percent over the year to 2.6 trillion won ($2.3 billion) in the January-June period, Hyundai said in a statement.

Operating margin declined 1.2 percentage points to 5.4 percent in the first half.

Revenue rose 1.4 percent to 47.67 trillion won in the cited period, but net income sank 34.3 percent to 2.32 trillion won.

A Hyundai Motor official said that though unexpected factors led to soft car sales in the Chinese market, global car sales except China expanded despite difficulties.

Hyundai's global auto sales shrank 8.2 percent over the year to 2,197,689 units in the first half, but the global sales except China increased 1.5 percent to 1,876,052 vehicles.

In the domestic market, Hyundai's car sales fell 1.7 percent to 344,130 vehicles, while the figure in overseas markets slumped 9.3 percent to 1,853,559 units in the cited period.

The ratio of production costs to revenue logged 81.1 percent in the first half, up 0.8 percentage points from a year earlier. It was attributed to the South Korean currency's appreciation to the U.S. dollar and higher incentives in key markets.

Operating costs advanced 4.3 percent from a year earlier to 6.42 trillion won in the first half due to rising marketing costs for newly-released models.

In the second quarter alone, Hyundai's operating profit was 1.34 trillion won, down 23.7 percent compared with a year earlier. Operating margin dipped 1.6 percentage points to 5.5 percent.

Revenue shed 1.5 percent over the year to 24.31 trillion won in the quarter, and net income plunged 48.2 percent to 913.63 billion won.

Hyundai sold 1,108,089 vehicles in the global car market in the April-June quarter. The weak sales stemmed mainly from falling demand in China, the world's biggest auto market.

The company forecast continued uncertainties in the global auto market, caused by stiffer competition and changed market environment amid the worldwide trend of low growth.

As part of efforts to overcome the difficulties, Hyundai planned to provide customer-tailored sport utility vehicles (SUVs) for product competitiveness and to intensify research and development (R&D) capability for future mobility market.