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Hyundai Motor reports 1st fall in operating profit in three years


SEOUL, Jan. 23 (Xinhua) -- Hyundai Motor, South Korea's largest automaker, said Thursday that its operating profit fell last year, the first time in three years, as weak domestic demand and production disruption at local factories offset brisk sales in overseas markets.

Operating profit reduced 1.5 percent from a year earlier to 8. 32 trillion won (7.75 billion U.S. dollars) in 2013, the first decline since 2011, the company said in an e-mailed statement.

Revenue increased 3.4 percent on year to 87.3 trillion won in 2013, but net profit slid 0.7 percent to 8.99 trillion won.

The ratio of operating profit to revenue declined 0.5 percentage points from a year earlier to 9.5 percent in 2013, falling below the 10 percent mark.

"Revenue gained last year thanks to robust demand in overseas markets, including the United States and China, but weak sales in the domestic market and production disruption in local plants led to the fall in operating profit," a Hyundai official said.

The official said that the foreign exchange rate movement weighed down on last year's earnings, noting that the Japanese yen weakened in 2013 amid the appreciation of the South Korean won.

The South Korean currency soared 23.6 percent against the Japanese yen last year, fueling concerns over the weak price competitiveness of South Korean automakers compared with Japanese rivals.

LG Economic Research Institute said that the weak yen trend will go on this year due to the so-called Abenomics, advocated by Japanese Prime Minister Shinzo Abe to invigorate the lackluster economy by injecting hefty liquidity.

Despite the weak yen, Hyundai's auto sales were expected to be boosted in China amid growing dislike for Japanese brands following Japanese Prime Minister Shinzo Abe's recent visit to the controversial Yasukuni shrine.

"Combined market share of Hyundai and its affiliate Kia jumped to as high as 9.8 percent in China following the escalating territorial disputes between China and Japan," Suh Sung-moon, an auto analyst at Korea Investment & Securities in Seoul, said in a report.

After the disputes between Beijing and Tokyo, Japanese carmakers saw its market share in China fall to as low as 7.6 percent, Suh said, forecasting that Abe's visit to the war-linked shrine would strike a blow to sales of Japanese cars.

Global car sales by Hyundai reached 4,732,366 vehicles in 2013, up 7.3 percent from a year earlier. Overseas sales, including those exported from local plants and those manufactured and sold from overseas factories, climbed 9.3 percent from a year earlier to 4,091.668 units.

Hyundai's auto sales in the domestic market decreased 4 percent from a year earlier to 640,698 units in 2013 due to the sluggish private consumption and brisk sales of imported cars caused by the implementation of free trade deals with the United States and Europe.

The company said that overseas car sales were boosted last year due to a hike in brand value of Hyundai, noting that Hyundai Motor became the 43rd-highest in 2013 in terms of brand value in the world.

Amid the dimmer 2014 outlook in both advanced and emerging economies, Hyundai will focus this year on the improvement of product quality and efforts to gain future competitive edge, the carmaker said.

It said that competition will become fiercer in the global auto market as Japanese carmakers were expected to make an aggressive marketing amid the weak yen trend, noting that domestic sales will face troubles due to the robust sales of foreign luxury cars.

Hyundai set its target of global car sales at 4.9 million this year, with goals in the domestic and overseas markets being placed at 682,000 vehicles and 4,218,000 units, respectively.



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