SEOUL (Reuters) - Hyundai Motor on Thursday announced a 28 percent drop in fourth quarter net profit, hit by lower investment gains from affiliates, higher marketing and warranty costs, even though sales inched up.
Affiliate Kia Motors Corp, however, earlier announced its quarterly net profit almost doubled fuelling hopes a softer won currency might help it overcome a devastating industry downturn.
But the outlook for South Korea’s top two automakers this year is grim amid a global recession and financial crisis that have hit worldwide car sales and squeezed credit.
Hyundai and Kia, together the world No.5 automaker, are still expected to weather the storm better than many of their global peers thanks to the softer won currency and focus on smaller, cheaper models, analysts said.
“Hyundai is actually doing relatively better compared to peers like Toyota that are posting losses,” said Sung Jin-kyung, a market analyst at Daeshin Securities.
For the full year 2009, Hyundai’s net profit is seen at 1.81 trillion won (950 million pounds), compared with 1.45 trillion won last year, while Kia’s net profit is forecast at 472.1 billion won, up from a 113.8 billion won profit last year, according to Reuters Estimates.
Hyundai posted an operating profit of 581.0 billion won, down 9 percent from a year ago and below a 638.6 billion won profit forecast.
After the results, shares in Hyundai erased much of their early gains to close 2.9 percent lower, underperforming a 1.1 percent rise in the wider market.
The maker of the Sonata sedan reported a net profit of 243.6 billion won in the fourth quarter of 2008, missing a 513.5 billion won forecast by 11 analysts in a Reuters poll.
That compared with a 338 billion won profit a year ago and a 264.8 billion won profit in the third quarter of 2008.
Sales rose 1 percent to 8.83 trillion won in October-December as a weaker won bolstered its overseas sales.
The South Korean currency fell 32 percent versus the dollar in the fourth quarter from a year earlier on average and 22 percent from the previous quarter, data from South Korea’s central bank showed.
Despite the boost from the weak won, Kia posted an operating profit of only 35.9 billion won during the fourth quarter, far below a 157 billion forecast by 10 analysts in a Reuters poll.
A softer won is expected to boost the value of Hyundai and Kia’s overseas sales and enhance their price competitiveness abroad.
Japanese automakers, including Toyota Motor Corp, have been suffering from a firmer yen, which rose about 23 percent against the dollar last year.
Hyundai and Kia are also likely to benefit from their smaller cars as more customers are expected to look for cheaper models in a slowing economy, analysts said.
Editing by Keiron Henderson
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