Hyundai Motor Q1 net profit drops 42%

SEOUL, South Korea – South Korea’s largest automaker Hyundai Motor reported a crash in 1st quarter net profit on Thursday, April 23, blaming weakening global demand caused by the coronavirus pandemic.

Net profit in the January-March period was 552.7 billion won ($448 million), down 42% from a year ago, it said in a statement.

The fall is mainly due to “temporary production disruption at its Korean facilities and weak global demand caused by COVID-19,” the company added.

But operating profit rose 4.7% year-on-year to 863.8 billion won, while sales were also up 5.6%, thanks to a “weaker Korean won against the US dollar,” among others, it said.

Crucial supply lines for the car industry were disrupted after the coronavirus outbreak in China earlier this year saw Beijing ordering factories closed in several areas, as it sought to contain the epidemic.

This had fractured the supply of parts for Hyundai – which with its affiliate Kia ranks as the world’s 5th largest auto manufacturer.

As a result, the firm has repeatedly suspended production at its factories across South Korea and overseas since February.

The automaker plans to halt operations at most of its domestic plants – including its giant Ulsan complex, capable of making 1.4 million vehicles annually – from April 30 to May 5.

The company “expects to face weakening profitability in the 2nd quarter as the impact of COVID-19 continues to hurt auto demand around the world,” it said in a statement.

Hyundai Motor shares closed down 0.22% in Seoul. – Rappler.com