Hyundai Motor Earnings Drop on Recall Costs, Currencies
(Bloomberg) -- Hyundai Motor Co. third-quarter earnings missed analysts’ estimates, hit by rising costs for recalls and weaker emerging-market currencies.
- The stock slumped after the Seoul-based automaker said it had expenses of about 500 billion won ($439 million) for recalls related to air-bag control units and engine issues as well as a new safety system that will be widely applied to new cars and some vehicles which were already sold.
- The results are set to intensify analysts’ concerns about the company’s profitability, with operating margins hovering at about 3 percent in recent quarters.
- Hyundai said it will seek to improve sales with new sport utility vehicles including a Genesis SUV and a large SUV. While Hyundai Motor has been trying to reverse slumping sales in China and the U.S., the effort comes at a difficult time with demand cooling in the world’s two largest auto markets amid an economic slowdown and trade tensions. Hyundai has also warned that the potential car tariffs considered by the U.S. would be “devastating.”
- Hyundai Motor again warned investors about “uncertainties in business environments.” Weaker emerging-market currencies also dragged down Hyundai’s revenue in the quarter. As part of its efforts to hedge risks, Hyundai plans to export some cars produced in Turkey to other countries.
- The shares fell as much as 12.4 percent, the biggest drop since the global financial crisis in 2008, and were down 6 percent at the close in Seoul. They’ve lost 29 percent this year.
- Operating profit dropped by 76 percent, net income missed estimates, revenue was in line. Read full data here: Hyundai Motor 3Q Operating Profit Misses Lowest Est.
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