Hyundai beat forecasts with a record quarterly profit as government incentives fuelled strong sales of its cheap, fuel-efficient models, setting the bar impossibly high for its struggling Japanese rivals.
Hyundai's strong results, its second record quarter profit in a row and more than triple the year ago figure, come as the global industry struggles to emerge from its worst ever downturn.
Honda is the only major Japanese car maker expected to post an operating profit in the fiscal first half, the Nikkei business daily reported today.
But Hyundai has taken advantage of the turmoil, ramping up its marketing spend to gain market share and overtaking Ford to become the world's fourth-largest automaker by sales in the first half of this year when combined with affiliate Kia.
But Hyundai warned a firmer won, rising oil prices and higher interest rates might hit earnings in the months ahead and its shares were little moved, after a 50 per cent surge in the third quarter.
Hyundai posted a net profit of 979.1 billion won ($832 million) in the third quarter, more than three times the 264.8 billion won of a year ago. Net profits were boosted by equity gains from overseas units, the company said.
Its operating profit of 586.8 billion won beat a forecast for a 561.2 billion won profit.
Hyundai shares dipped 0.5 per cent after the results, having far outperformed a 14.5 per cent gain in the country's main KOSPI Index in the third quarter.
But both Hyundai and the broader index have lost ground since amid concerns over the impact of a stronger won.
The won is recovering on the back of weakness in the dollar. It gained 8.1 per cent versus the dollar in the third quarter and is up 36 per cent since early-March.
Hyundai's rivals in Japan are also struggling to cope with a weak dollar and their reliance on the United States and their home market, both of which are struggling with the weakest demand in decades.
World number one car manufacturer Toyotais expected to post an equivalent quarterly net loss of around 25 billion yen ($275 million) when it reports early next month.
The Nikkei said Honda, Japan's second-biggest car manufacturer behind Toyota, will likely post an operating profit of 60 billion yen ($660 million) for the April-September first half, beating its forecast for a loss on cost-cutting and solid sales of fuel-efficient cars.
Honda's reported first half figure implies an operating profit of 34.8 billion yen for the July-September quarter.
Honda reports next week, with Toyota and Nissan following the week after.
Results from the third-quarter reporting season in Europe have largely met expectations thanks to government incentives boosting sales, but shares have struggled on concerns about next year.
Third quarter results from Fiat yesterday met expectations but the Italian carmaker's shares gave back recent gains, dropping over 6 per cent, while analysts said PSA Peugeot-Citroen's failure to shore up production ahead of what could be a bleaker 2010 caused its shares to slide 6 per cent.
Reuters