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Hyundai Motor posts double-digit decline in Q2 earnings on strong currency


SEOUL, (Xinhua) -- South Korea's top automaker Hyundai Motor said Thursday that it logged a double-digit decline in its second-quarter earnings due to the local currency's appreciation to the U.S. dollar.

Operating profit was 2.09 trillion won (2.03 billion U.S. dollars) in the three months ending June 30, down 13.3 percent from the same period of last year, the company said in a statement.

It fell short of the market consensus of about 2.2 trillion won as the South Korean won's ascent to the dollar reduced overseas earnings converted into the local currency.

Revenue fell 1.9 percent from a year earlier to 22.75 trillion won in the second quarter, and net income declined 6.9 percent to 2.35 trillion won.

For the first half of this year, the company's sales slid 0.3 percent on year to 44.4 trillion won, and operating profit decreased 5.8 percent to 4.03 trillion won. Net income was 4.38 trillion won in the first half.

Hyundai's global car sales climbed 4.4 percent from a year earlier to 2,495,837 units in the first half, with domestic and overseas sales reaching 345,709 and 2,150,128 units respectively.

The solid auto sales were attributable to launches of new models, including Genesis and Sonata, and demand for sport utility vehicle (SUV) amid the rise in leisure culture activity.

Despite the robust sales, the first-half earnings showed underperformance as the South Korean currency rose 5.1 percent to the dollar in the cited period, reducing overseas earnings. The operating margin was 9.1 percent in the first half, down 0.5 percentage point from a year earlier.

The company said there remained uncertainties for the second half, including the tapering of the U.S. quantitative easing, economic slowdown in advanced economies and worries about growth in China.

Hyundai, however, noted that it will overcome those uncertainties by enhancing product quality, launching new models and reducing costs.

The carmaker forecast the won/dollar exchange rate would average 1,020 won on a daily basis in the second half, saying the current account surplus trend would continue amid the persistent foreign capital inflow. The figure was lower than 1,050 won forecast six months earlier.

There remained expectations for the exchange rate to rebound in the second half on speculation the U.S. Federal Reserve will raise interest rates in the foreseeable future and Bank of Korea (BOK) will cut policy rates within this year.

Hyundai shares closed at 229,000 won Thursday, up 1.6 percent from Wednesday's close on the back of strong car sales that offset lower operating margin.



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