Hyundai Motor Co.’s net income increased 46 percent to 1.88 trillion won ($1.75 billion) in the first quarter ended March 31, 2011 from its revised 1.28 trillion won on the same period last year, the company revealed in its regulatory filing. The company’s sales for the first three months increased 21 percent to 18.23 trillion won on a consolidated basis.
After introducing the Grandeur premium sedan and other new models in its home market and Accent compact vehicle in China since late last year, the company’s sales increased by around 9 percent last quarter from the same period in 2010.
The company is expected to continue gaining sales this year, while its Japanese competitors including Toyota Motor Corp. reduces production due to the March 11 earthquake in Japan.
According to KDB Asset Management Co.’s head of equity, Lim Jeong Seok, Hyundai is “showing strong earnings momentum on new models and improved quality.” He also forecasted that the trend will remain in the next two to three years, leveling with stock performance.
The company’s operating profit -- sales minus the administrative expenses and costs of goods sold -- increased to 1.83 trillion won, a 46 percent increase from a year earlier.
Hyundai, which manufactures Elantra compact vehicles and Sonata sedan, sold 922,000 automobiles in the first quarter, a 9 percent greater than a year earlier, the company’s data revealed. Moreover they sold 922,000 units from January to March 2011, amid a 14% increase in sales from overseas factories.
According to Woori Investment & Securities Co., Seoul analyst Cho Soo Hong, Hyundai is asking for higher prices from customers, supported by improved quality as well as brand perception. He concluded that the increase in selling price and overseas production will balance the negatives caused by a strengthening won on income.
The company’s Chief Financial Officer Lee Won Hee said that Hyundai should point out a demand in US sales of 13 million units at the most for 2011. While the demand is high, the company does not plan at this time to construct another facility on this North American continent.
Toyota, the largest carmaker worldwide at present, figured out they could lose a production 300,000 units in Japan and 100,000 units more across the globe, because of factory shutdowns plus supply parts shortages.
Nevertheless, rivals like Kia and Hyundai have plants in the US that are fully operational, which may cause changes in how the top-selling automakers are ranked globally. Lim at KDB Asset said that as chaos leads to disorder, there will be some shifting in the order. He concluded that the previous financial crisis plus the latest earthquake may serve as an opportunity for Hyundai to outshine the bigger competition.