Hyundai Motor's Q3 operating profit rises 12.7%

Visitors look at an Ioniq electric vehicle by Hyundai at the Hyundai Motorstudio showroom in Goyang, South Korea.[Photo/Agencies]

SEOUL - Hyundai Motor, South Korea's biggest automaker, posted a double-digit growth in the third-quarter operating profit mainly due to a so-called low base effect, a regulatory filing showed Thursday.

Operating profit was 1.2 trillion won ($1.1 billion) in the July-September quarter, up 12.7 percent from a year earlier. It marked the first expansion in five quarters.

Revenue increased 9.6 percent over the year to 24.2 trillion won in the quarter, but net income tumbled 16.1 percent to 939.2 billion won.

The third-quarter increase in operating profit was a turnaround from a 24 percent drop in the previous quarter, but the rebound was mainly attributable to the low base effect, in which Hyundai logged an unusually low profit in the same quarter of last year on partial strikes and less business days.

Hyundai's global auto sales stood at 1,071,496 units in the September quarter, down 1.2 percent from a year ago.

The net income stayed below 1 trillion won for two straight quarters as demand for Hyundai-manufactured vehicles weakened especially in China, the world's biggest automobile market.

A senior Hyundai official told a conference call after the earnings announcement that the carmaker will launch new models customized for Chinese consumers to boost sales in the Chinese market.

Hyundai, the official said, will also expand its line-up of sports utility vehicle (SUV), which is popular in the Chinese market, while reviewing how to improve its competitiveness in multiple areas, including R&D, sales and services, in the long run.

The South Korean company planned to increase its line-up of environmentally-friendly vehicles gradually to expand its presence in China's eco-friendly automobile market, the official added.

In the January-September period, Hyundai logged an operating profit of 3.8 trillion won on revenue of 71.88 trillion won. The revenue grew 4 percent, but the operating profit declined 8.9 percent compared with the same period of last year.

Net income plunged 29.9 percent over the year to 3.26 trillion won in the January-September period as auto sales worsened in the Chinese market.

Hyundai sold a total of 3,269,185 vehicles in the global market for the first nine months of this year, down 6 percent from a year earlier. When excluding sales in China, Hyundai's global auto sales increased 3.2 percent in the cited period.

Hyundai's car sales in the local market expanded 7.5 percent to 517,350 units in the January-September period, but those in the overseas markets declined 8.2 percent to 2,751,835 vehicles.

The ratio of production costs to revenue inched up 0.4 percentage point to 81.4 percent in the cited period owing to the local currency's appreciation to major currencies, including the US dollar, and sales incentives provided for major markets.

Operating costs gained 6.4 percent to 9.56 trillion won on increased marketing activity for the launch of new models, leading to an 8.9 percent fall in operating profit.