SEOUL-- South Korea's top carmaker Hyundai Motor Co. said Wednesday its second-quarter net profit plunged 48 percent, as lower sales in China deeply cut into its bottom line.
In the three months that ended June 30, net profit plunged to 914 billion won (US$815.2 million) from 1.76 trillion won a year earlier, the company said in a statement.
In a conference call, company officials warned of more uncertainty for the rest of this year due to tougher competition with rivals and rapidly changing market environments.
"We will put top priority on improving profitability in the second half," Hyundai Motor Vice President Koo Za-yong said in the conference call. "We are planning to improve our product mix by decreasing the number of sedans and adding new sport-utility vehicles in the smallest A and biggest E segment by 2020."
The company expects the launch of new models such as the Kona, its first subcompact SUV, first high-performance i30N hatchback and Genesis luxury G70 sedan into global markets will help improve sales in the second half.
Political tensions with China appear to be the main cut into second-quarter results. But the real concern is that Hyundai Motor lags far behind foreign carmakers in brand recognition and is far less competitive in prices in the world's biggest automobile market, analysts said.
Moreover, lack of SUV models and high incentives, at about $3,300 per car last month, will remain a major drag for Hyundai Motor throughout this year, they said.
Shares in Hyundai Motor ended 1.37 percent higher at 148,000 won after trimming intraday gains following the earnings announcement.
In the second quarter, consumer sentiment against South Korean products in China and a lack of new models in the United States mainly ate into Hyundai Motor's bottom line.
Starting March 15, China banned the sale of group travel packages to South Korea as part of apparent retaliation against the installation of a U.S. missile defense system, called the Terminal High Altitude Area Defense (THAAD) system, here.
Seoul and Washington have argued that THAAD is purely aimed at countering missile threats from North Korea. But Beijing has opposed the system, arguing it could be used against it.
Operating profit fell 24 percent to 1.34 trillion won in the April-June quarter from 1.76 trillion won a year earlier. Sales declined 1.5 percent to 24.31 trillion won from 24.68 trillion won during the same period, the statement said.
In the January-June period, Hyundai's net profit fell 34 percent on-year to 2.32 trillion won from 3.53 trillion won.
Its first-half global sales dropped 8.2 percent to 2.2 million cars. Its sales in China plunged 42 percent to 301,277, the company said.
Operating profit was down 16 percent to 2.60 trillion won in the first half from 3.1 trillion won a year earlier. Sales rose 1.4 percent to 47.67 trillion won from 47.03 trillion won during the mentioned period.
Source: Yonhap News Agency