SEOUL (Reuters) - South Korea’s Hyundai Motor (005380.KS) missed analyst estimates by posting first-quarter net profit that was almost identical to a year earlier, as lackluster U.S. performance offset increased sales in China and Korea.
Shares of Hyundai fell over 2 percent after the automaker reported January-March net profit of 1.93 trillion won ($1.86 billion), compared with the 2.19 trillion won mean estimate of 13 analysts polled by Thomson Reuters I/B/E/S.
Revenue rose 1 percent to 21.65 trillion won.
In the United States, where a management reshuffle followed a product recall, sales fell 3 percent. As well as competing with rivals touting newer models, Hyundai also had to contend with a stronger won potentially making Hyundai’s exports from Korea more expensive for overseas buyers.
The won, which gained 1.5 percent against the U.S. dollar in the first quarter from a year earlier, traded close to a six-year high in April, reducing the value of overseas earnings converted into the won.
Refreshed Genesis and Sonata lines could help Hyundai catch rivals who in recent years released new models in the United States, where a brake switch issue led to a recall last year that cost Hyundai 90 billion won ($86.74 million).
Hyundai set aside cash to cover the recall in January-March 2013.
Hyundai, the world’s fifth-biggest automaker when combined with affiliate Kia Motors Corp (000270.KS), has been expanding sales in neighboring China where the automaker tasked its new local chief this month with expediting the construction of a fourth factory.
Adding capacity at its third Chinese plant helped raise sales in the country by 9 percent in the first quarter.
At home in Korea, sales climbed 5 percent with the help of the luxury, higher-margin Genesis - revamped late in 2013 - as well as a recovery in production following a labor dispute a year earlier.
Hyundai will begin annual wage talks as early as May with the labor union in Korea, where the automaker builds nearly 40 percent of the vehicles it sells globally.
Domestic sales could get a lift in the second quarter from the introduction late last month of a Sonata redesigned for the first time in five years.
Hyundai’s bread-and-butter model, however, is pitted against imports such as Volkswagen’s Passat and Toyota’s Camry which are benefiting from free-trade deals.
Editing by Christopher Cushing