Seoul – Hyundai Motor Co’s quarterly profit has improved 19% as expected due to higher raw material costs and prolonged global chip shortages, favorable exchange rates for sales declines.
The company’s global car sales fell nearly 10% in the first quarter, and Hyundai warned that it expects further disruptions in the supply chain due to lockdowns in several Chinese cities.
Like other automakers, Hyundai has raised prices to cope with rising raw material costs and logistical costs such as sourcing chips, and analysts expect more car prices to rise.
Net profit rose 1.6 trillion won ($ 1.3 billion) in January-March. According to Refinitiv SmartEstimate, analysts had expected a profit of 1.4 trillion won.
Shares of Automaker jumped as much as 4%, although the parade profit ended 1% higher.
Hyundai said in a statement that “strong sales of SUVs and Genesis luxury models, declining incentives, and a favorable foreign exchange environment have helped boost revenue … despite the slowdown in sales.”
The South Korean won was about 7% weaker against the US dollar during this period, which increased the value of income earned abroad.
Hyundai, which suspended operations at its St. Petersburg plant on March 1 and is only selling the remaining inventory in the country, said it wanted to reduce costs there by reducing incentive and marketing costs.
“We will consider delaying the implementation of planned investments this year and will launch new cars in Russia to increase the profitability of our operations in Russia,” executive vice president CO Gang Hyun said in an earnings call.
Hyundai and affiliate Kia Corporation together have the second largest share in the Russian market after French automaker Renault, and Hyundai’s Russian sales account for about 5% of its total sales.
Hyundai has not decided when it will resume operations. Currently, no major carmaker has announced a complete withdrawal from the Russian market.
($ 1 = 1,249.1500 won)
(Reporting by Hekiang Young and Joyce Lee; Editing by Sayantani Ghosh and Edwina Gibbs)