​Hyundai Motor's net profit halves due to slow sales in US and China

By Park Sae-jin Posted : April 26, 2018, 16:56 Updated : April 26, 2018, 16:56

[Yonhap Photo]



SEOUL -- South Korea's leading carmaker, Hyundai Motor, reported a dismal first-quarter performance with its net profit halving from a year earlier due to strikes at home and slow sales in the United States and China.

Hyundai Motor said Thursday that net profit fell 48 percent on-year to 731.6 billion won (676.8 million US dollars). Sales were down four percent on-year to 22.4 trillion won and operating profit dropped 45.5 percent to 681 billion.

The company predicted improved profitability, boosted by new luxury and sport utility vehicle (SUV) models scheduled for release later this year.

Hyundai Mobis, the part-making unit of the auto group, posted a 39 percent drop in its first-quarter net profit, which stood at 465.9 billion won. Its operating profit was down 33 percent on-year to 449.8 billion won and sales fell 12 percent to 8.194 trillion won.

The earnings report came after U.S. activist hedge fund Elliott Management urged Hyundai Motor to form a holding company by absorbing Hyundai Mobis.

The auto group has vowed to streamline its governance structure by splitting the module manufacturing and after-sales parts business of Hyundai Mobis to combine it with Hyundai Glovis, a logistics unit.  Hyundai Motor has been hesitant to introduce a holding company as yet.
 
South Korea's top antitrust regulator sided with Hyundai saying Elliott's demand violates a fair trade law which bans a holding company from controlling a financial affiliate. Elliott holds more than 1.5 percent of the common stock in Hyundai Motor, Hyundai Mobis and Kia Motors.
 
At a business forum on Thursday, Korea Fair Trade Commission Chairman Kim Sang-jo said Hyundai Motor has Hyundai Capital Services and Hyundai Card under its wing.
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