South Korea’s largest automaker Hyundai Motor Co. stunned the market with an operating profit in the first quarter nearly halved from a year ago to underscore the extent of its poor performance in the world’s two largest economies of China and the United States.

The company said in a regulatory filing on Thursday that its operating profit in the January to March period fell 45.5 percent from a year ago to 681.3 billion won ($631.6 million), its worst performance since it compiled statements under the 2010 International Financial Reporting Standards.

Its sales fell 4 percent on year to 22.44 trillion won.

Upset by the poorer-than-expected results and foggy outlook for the country’s largest auto conglomerate, investors shed shares in Hyundai Motor Group. Shares of Hyundai Motor finished Thursday 4.6 percent down at 156,500 won and those of its primary parts maker Hyundai Mobis 1.2 percent down at 241,000 won. Kia Motors also ended 1 percent lower at 31,050 won.

Hyundai Motor sold 1,049,389 vehicles in the first quarter, down 1.7 percent from a year ago. Its domestic sales increased 4.5 percent to 169,203 units thanks to brisk sales of its sport utility vehicle Kona and all-new Santa Fe but overseas sales fell 2.8 percent to 880,186 units. Sales rose developing markets such as India, Russia, and Brazil, but fell short of offsetting losses in China and the U.S.

An unnamed official from Hyundai Motor said that stronger won against the U.S. dollar and its unseasonal labor union strike in the first quarter dragged down overall performance in the first quarter. Overall profitability also weakened due to poor performance of its non-vehicle business, the official said.

Hyundai Motor, meanwhile, spent 2.79 trillion won on operation costs in the January-March period, down 8.4 percent from a year ago as the company reduced overall costs particularly on marketing activities. Its operating margin deteriorated 2.4 percentage points to 3 percent during the same period.

Hyundai Motor said it will strive to gradually improve profitability in the second quarter and beyond as it expects mixed improvement through sales expansion of new high-end vehicles, sport utility vehicles, and luxury cars, and incentive stability.

Hyundai Motor is hoping all-new Santa Fe will do equally well in global markets, particularly in the U.S.. It released a number of new customized vehicles in China.

By Lee Seung-hoon and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]