* Q4 revenue drops 3 pct to 21.94 trln won
* Q4 net profit up 15 pct to 2.06 trln won vs. consensus of
* Korean won up 3 pct versus dollar, 27 pct versus yen in Q4
* Sales in lucrative home market slumps 13 pct in Q4
By Hyunjoo Jin
SEOUL, Jan 23 South Korea's Hyundai Motor
posted its first year-on-year fall in quarterly
revenue in nearly three years, hit by a stronger local currency
and slumping sales at home, compounding the challenges facing
the once star performer.
Hyundai, the world's fifth-biggest automaker along with Kia
Motors, has endured a tough year, marked by
lacklustre performances in the United States and Europe, a
string of recalls and a management reshuffle.
The company's China sales jumped last year, but growth
slowed in the fourth quarter in the key market as Japanese
rivals made a comeback. It hopes increased capacity will push
growth back up in China this year.
Hyundai concedes global sales growth will slow to 4 percent
this year from 7 percent last year, even as it plans to launch a
revamped version of its popular Sonata sedan. Overall, it aims
to sell 4.9 million vehicles in 2014.
On Thursday, the carmaker posted a revenue of 21.94 trillion
Korean won ($20.56 billion) in the October to December period, a
3 percent fall from a year earlier. This marked its first
year-on-year fall since at least 2011 when new accounting
methods were adopted.
"Currency fluctuations - the won's strength coupled with the
yen's weakness - weighed on our earnings," Hyundai said in a
The South Korean won gained 3 percent against the dollar and
surged 27 percent versus the Japanese yen in the fourth quarter
from a year earlier, reducing the value of Hyundai Motor's
overseas revenue in local currency terms and lifting Japanese
rivals' price competitiveness in the United States and other key
Hyundai seeks to revive growth with new models, but the
won's strength, coupled with the yen's weakness, may toughen
competition and curb price rises.
"It will be challenging for Hyundai to enjoy new car effects
as it did in the past because of intensifying competition," Kim
Kwan-oh, a fund manger at Consus Asset Management, said.
"Other than capacity expansion, there seems to be little way
for Hyundai to increase revenue," he said.
Hyundai has not announced new plant plans in recent years,
opting for squeezing out more vehicles from existing plants.
This allowed the automaker to run factories at full capacity
globally and achieve an industry-leading margin of 9.5 percent
last year, but sales growth slowed down.
Net profit jumped 15 percent to 2.06 trillion won, but
missed a consensus forecast of 2.23 trillion. Its profit a year
ago was hurt by provisions to cover the cost of compensating
customers for overstated fuel-economy claims on some cars sold
in the United States and Canada.
Shares in Hyundai Motor ended down 1.9 percent after the
results, versus the wider market's 1.2 percent drop.
In its home market of South Korea, Hyundai's sales slumped
13 percent in the fourth quarter as imported rivals like
Volkswagen and Mercedes Benz boosted
sales after trade deals.
South Korea is the third biggest market for Hyundai, after
China and the United States, but a lucrative revenue source as
the automaker sells more large-sized, higher-margin cars than it
does in the bigger U.S. market.
Hyundai's China growth slowed to 4 percent last quarter, as
Japanese rivals strongly rebounded from a sales slump after
tensions eased in a territorial row between Japan and China.
But for the whole year, its China sales surged 21 percent,
driven by its new plant which went into operations in 2012.
The South Korean automaker hopes to increase China sales by
more than 10 percent in 2014, fueled by an increased capacity,
Lee Won-hee, Hyundai's chief finiancial officer said.
Last year, Hyundai's U.S. sales rose just 3 percent and
Europe sales slumped 8.8 percent, as the automaker lost market
share in the markets where it used to outperform.
Hyundai's new U.S. chief expected its market share to
increase slightly to 4.7 percent this year from 4.6 percent in
2013, propelled by new models such as the revamped Sonata sedan
and fewer capacity constraints.
In Europe, Hyundai is pinning hopes on the revamped version
of the i10 and i20 small cars, Lee said.