The headquarters of Hyundai Motor and Kia in southern Seoul / Courtesy of Hyundai Motor Group
Local automotive industry leaders Hyundai Motor and Kia are expected to report lackluster first-quarter earnings compared with last year due to the effects of U.S. tariffs and a weaker Korean won, a market analysis showed Wednesday.
According to the analysis of earnings forecasts from securities firms compiled by Yonhap Infomax over the past three months, Hyundai Motor is estimated to report sales of 45.89 trillion won ($30.4 billion) on average for the January-March period and an operating profit of 2.78 trillion won in its earnings report expected to be released Thursday.
The projected sales figure represents a 3.3 percent increase, while operating profit marks a 23.3 percent decline.
Its sister Kia is estimated to report 29.62 trillion won in sales and 2.32 trillion won in operating profit, which would mark a 5.7 percent on-year growth and a 22.6 percent decline, respectively, on Friday.
The projected earnings declines come despite relatively solid sales performance by Hyundai Motor and Kia compared with global peers, as U.S. tariffs, which took effect in April of last year, and increased warranty-related provisions are likely to have offset the gains.
Hyundai Motor sold 975,123 vehicles globally in the first quarter, down 2.6 percent from a year earlier, while Kia sold 779,169 units, up 0.8 percent, according to the companies' preliminary data.
A weaker Korean won is also expected to have increased car warranty provision costs, which are typically booked in foreign currency, likely putting additional pressure on the companies' operating profits, according to market watchers.
Source: Korea Times News
