Hyundai Posts Record $1.2B Profit

Automaker's?second-quarter profit soared 71 percent?on double-digit jump in global sales, including strong performance in the U.S., China and emerging markets.

SEOUL, South Korea (AP) -- Hyundai Motor Co.'s second-quarter profit soared 71 percent to a record high on a double-digit jump in global sales, including strong performance in the United States, China and emerging markets.

South Korea's biggest automaker said it earned 1.39 trillion won ($1.2 billion) in the three months ended June 30. It earned 811.9 billion won the same period last year.

The result exceeded Hyundai's previous record profit of 1.13 trillion won in the first quarter of this year and highlights its emergence as a rising force in the global auto industry.

Hyundai Motor and affiliate Kia Motors Corp., which reports its results separately on Friday, form the world's fifth-largest automotive group.

Both have expanded aggressively overseas. Hyundai has factories in China, India, Turkey, the United States and the Czech Republic. Kia has plants in China and Slovakia and began production in the U.S. last year.

Yim Eun-young, an auto analyst at Dongbu Securities in Seoul, said Hyundai benefited during the second quarter from lower vehicle component costs, a reduction in spending on marketing and incentives in the United States and strong demand in China and other parts of the developing world.

"Hyundai's position is very strong in emerging markets compared to competitors," she said. "That's why Hyundai is surging."

Hyundai, maker of the Elantra and Sonata sedans and the luxury Genesis, said sales rose 18.3 percent to 9.56 trillion won from 8.08 trillion won a year earlier.

The Seoul-based company said second-quarter global sales volume rose 19.2 percent to 922,225 vehicles from 773,809 the same time last year.

Exports from factories in South Korea rose 40.1 percent, though Hyundai's domestic sales fell 17.8 percent, which analysts attributed to the popularity of Kia's hot-selling K5 sedan, which helped the smaller automaker gain market share.

Sales at Hyundai's overseas plants rose 25.4 percent to 464,731 vehicles, the company said.

Song Meeyoung, a Hyundai spokeswoman, said profits from the company's U.S. and Chinese operations boosted the bottom line in the second quarter and demand in emerging markets has led sales.

She also said sales of new versions of the Sonata sedan and the Tucson SUV in the U.S. helped increase sales in the first half of the year.

Sales revenue from Hyundai's U.S. factory rose 72.3 percent in the first six months of 2010 from a year ago, while the number of vehicles sold gained 84.3 percent. Sales revenue from Chinese plants rose 14.9 percent and volume was up 27.9 percent. Sales revenue from factories in India increased 11.2 percent while volume rose 19.7 percent.

The company did not provide breakdowns for its overseas plants for the second quarter alone. It also did not release an exact figure for global market share, but Song, the spokeswoman, said it was about 5 percent. The company's 2009 market share was 5.2 percent.

Hyundai's global sales for the first six months of the year increased 27 percent from the year before to 1.76 million vehicles, putting it on pace to exceed its annual sales record of 3.11 million set in 2009.

The company said in a press release the sales increase came despite a stronger South Korean won against both the dollar and euro.

Hyundai said the greenback fell 14 percent against the won during the first half compared with the same period last year, while the euro slid 16 percent. Hyundai did not give a currency breakdown for the second quarter alone.

A stronger won can hurt the earnings of South Korean companies by making their products more expensive in overseas markets and reducing the value of profits earned abroad when converted from foreign currencies. A robust currency, however, can also reduce the cost of imported raw material.

Hyundai said the overall increase in sales and an improved product mix helped it overcome the currency handicap.

Shares in Hyundai Motor fell 0.7 percent to finish at 144,000 won. The company's share price tripled in 2009.