Hyundai Motor Co. reported on the 25th of October a 13 percent growth in net profit for the third quarter. Despite labor strike in South Korea the reported profit exceeded analysts’ estimates as Hyundai Motor Co. benefited from the territorial dispute between China and Japan.
Hyundai 3Q profit
The 13% growth in the Hyundai Motor Co.’s third-quarter profit exceeded analysts’ estimations as the South Korea’s largest carmaker had decided to shift more production overseas which helped minimize the impact of strikes.
According to released data, Hyundai Motor Co.’s third-quarter net profit grew as much as 13 percent to 2.17 trillion won ($2 billion), from about 1.92 trillion won a year earlier. However the company’s net profit dropped approximately 15 percent from the second quarter after strikes at Hyundai Motor Co.’s plants cut the production.
Data showed that deliveries in China increased as much as 19 percent after Chinese consumers turned their back on Japan’s carmakers including Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. as a result of territorial dispute between China and Japan.
Certainly the increase in China sales helped Hyundai Motor Co. overcome the fallout from a seven-week labor strike at its plants located in South Korea. According to the company’s estimates, the labor union's decision not to work both some regular and overnight shifts caused the lost output of approximately 82,000 cars valued at $1.5 billion. Lee Sang Hyun, an analyst at NH Investment & Securities Co., noted: “The impact of the strikes was especially high. Sales will increase in the fourth quarter as Hyundai tries to make up for the losses of the last three months.”
In the United Stated, the South Korea’s second largest market, third-quarter sales grew about 7.7 percent as deliveries of the Sonata and Santa-Fe saw drops of 3 percent and 29 percents, respectively. The company, which is led by Chung Mong-koo, lost market share after Japan's carmakers returned with new models after recovering from the last year’s natural disasters.
In Europe, the South Korea’s largest carmaker gained market share due to demand for Tucson sport utility vehicles and the i10 minicar. Yet the company’s sales are approximately 27 percent below the company’s 2010 target in Europe, which still remains its fourth-largest market. However Hyundai Motor Co. informed that the European car market would decrease as much as 8 percent in 2012.
Hyundai looks at China
In September, Chung Mong Koo, the chairman of both Hyundai Motor and affiliate Kia Motors Corp., informed that combined sales in China would probably top their targets of 1.25 million units.
Consumers in China have been avoiding buying cars produced by Japan's carmakers, including Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. Data showed that sales of Japan's companies in China dropped as much as 41 percent in September. Japan's carmakers decided to cut its production at plants located in China as a result of the alarming situation. Without a doubt, Hyundai Motor Co. can take advantage of the current situation and the new plant in China might help the company achieve even better results.