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Hyundai Announces Surge In Profits As Favourable Currency Rates Offset Decline In Sales

Hyundai Announces Surge In Profits As Favourable Currency Rates Offset Decline In Sales
Hyundai Motor Co reported a 19 per cent increase in quarterly profit, beating market expectations, as the company’s business was driven by favourable exchange rates which helped to more than offset the costs for higher raw materials as well as lower sales because of a prolonged worldwide semiconductor shortage.
Hyundai also warned that the business' global auto sales fell roughly 10 per cent in the first quarter, and that the company expects more supply chain disruptions as a result of the lockdowns in numerous Chinese cities because of the spread of the COVID pandemic. .
Hyundai, like other automakers of the world, has been forced to hike its priced in order to deal with the rising raw material costs and logistics costs such as chip procurement. Market experts have forecast more potential price hikes in the future because of these reasons.
In the January-March period, the net profit of the company increased to 1.6 trillion won ($1.3 billion), the company said. According to Refinitiv SmartEstimate, analysts had predicted a profit of 1.4 trillion won.
The automaker's stock rose as much as 4 per cent before reversing course to finish 1 per cent  higher on Monday.
"Robust sales of SUV and Genesis luxury models, declining incentives, and a favorable foreign exchange environment helped lift revenue ... despite the slowdown in sales volume," Hyundai said in a statement.
During that time, the South Korean won was nearly 7 per cent weaker versus the US dollar, enhancing the value of earnings of the company made abroad.
Hyundai said it was aiming to minimise costs by lowering incentive and marketing expenses at its St. Petersburg facility, which closed on March 1 and is solely selling remaining inventory in the country.
"We will consider delaying executions of planned investments this year and new car launches in Russia to enhance our Russia operation's profitability," Executive Vice President Seo Gang Hyun told an earnings call.
Hyundai and its affiliate Kia Corp have the second-largest market share in Russia behind Renault, and Hyundai's Russian sales account for about 5% of the company's total sales.
Hyundai has yet to make a decision on when it will resume operations. No major carmaker has announced a complete exit from the Russian market as of yet.

Christopher J. Mitchell

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