SEOUL (Reuters) - South Korea's Hyundai Motor (KS:005380) posted its ninth straight quarterly profit drop as it trailed rivals in tapping soaring demand for sport utility vehicles in China, its biggest market.
Hyundai's strength in smaller, fuel-efficient sedans helped the automaker outperform the industry during the global economic downturn, but has left it reeling from a consumer shift to gas-guzzling sport utility vehicles (SUVs) in recent years, driven by a slump in the price of oil.
Hyundai Motor, the world's fifth-biggest automaker together with affiliate Kia Motors (KS:000270), reported on Tuesday a net profit of 1.69 trillion won (1.01 billion pounds) for the first quarter, down 12 percent from the year-ago quarter and compared with the 1.46 trillion won average estimate of 14 analysts polled by Thomson Reuters I/B/E/S.
Operating profit declined 16 percent to 1.34 trillion won, while revenue rose 7 percent to 22.35 trillion won.
Hyundai Motor's global sales declined 6 percent to 1.1 million vehicles in the first quarter. In China, Hyundai's first-quarter vehicle sales fell 10 percent despite the country's tax cuts on small car purchases, as Chinese local rivals such as Great Wall Motor <601633.SS> offered cheaper SUVs.
Hyundai, together with Kia, have the highest sales exposure among major automakers to emerging markets, including China, Russia and Brazil, making them vulnerable to a slowdown in those markets, according to Macquarie Securities.
In the U.S. market, where appetite for SUVs and trucks has been strong, Hyundai posted flat sales in the first quarter, weighed down by its sedan-heavy lineup. Strong demand for large SUVs and trucks in North America helped U.S. automaker General Motors Co (N:GM) post bigger-than-expected profits for the first quarter.
Shares in Hyundai were 2 percent higher, compared with the flat wider market (KS11), after the earnings announcement. Its shares were almost flat this year, lagging the market's 3 percent gain as of Monday's close.