(Adds more details, analyst quotes)
By Cheon Jong-woo
SEOUL, Oct 25 (Reuters) - Hyundai Motor Co <005380.KS> posted
a better-than-expected 45 percent rise in quarterly profit as
output at South Korea's top auto maker spiked after it avoided a
strike for the first time in 10 years and as domestic sales rose.
Increased spending by South Korean consumers is expected to
bolster profits in coming quarters at Hyundai, which controls
about half of the high-margin domestic auto market.
But sales are expected to remain under pressure in the United
States, where fallout from the housing market is denting demand,
and China, where fierce competition is hurting.
Hyundai's stronger profit came after the company reached a
wage deal in September with its unionised workers, managing to
avoid a strike for the first time in a decade.
Last year, a month of work stoppages were estimated to have
cost Hyundai 1.3 trillion won ($1.42 billion) in lost output.
The maker of the Sonata sedan and the Santa Fe sport utility
vehicle (SUV) also benefited from a 5.9 percent fall in won
against the yen <JPYKRW=R> in the third quarter.
"It looks like the worst is over for Hyundai, as the won's
sharp appreciation against the yen -- Hyundai's biggest headache
over the past year -- shows signs of grinding to a halt," said
Chung Kyun-sik, chief investment officer at Eastar Investment
Advisors.
Hyundai, the world's No.6 car maker with Kia Motors Corp
<000270.KS> by sales volume, made 425.5 billion won ($464.3
million) in net profit during the third quarter ended Sept. 30,
beating a 394 billion won profit forecast by 10 analysts in a
Reuters poll, and a revised 293.8 billion won a year ago.
It is likely to post a 20.7 percent jump in full-year 2007
net profit to 1.84 trillion won ($2.01 billion), according to 28
brokers polled by Reuters Estimates.
CHINA, U.S. WORRY
But analysts warned earnings momentum would slow if Hyundai
keeps suffering in China, the world's No.2 auto market.
Sales in the world's fastest growing auto market are being
hurt by cheap competition from companies such as Honda Motor Co
Ltd <7267.T>, and analysts say they are unlikely to recover soon.
For Honda's earnings, click on [ID:nSP249666]
In September, Hyundai, whose sales in China dropped 21
percent during the first nine months in 2007 from a year ago,
slashed its sales target for this year there by 16 percent.
Hyundai is halting production at its U.S. plant for 10 days
this quarter after lowering its sales target there too. U.S.
sales dipped 0.2 percent in the first nine months.
A Hyundai senior official said the company would miss its new
U.S. sales target of 510,000 vehicles.
"U.S. sales figures are disappointing. We initially targeted
a market share of over 3 percent, but our market share would be
just 2.9 percent," Park Dong-wook, a director at Hyundai's
treasury division, told reporters and investors.
Hyundai would sell 475,000 units this year, he added.
July-September sales rose 20 percent from the year-ago period
to 7.04 trillion won, beating a 6.86 trillion won forecast by
Reuters.
After the result, shares in Hyundai with a market value of
$15.2 billion, rose 3.5 percent higher at 65,400 won, outpacing a
2.2 percent gain in the wider market <.KS11>.
Hyundai's shares advanced 1.2 percent during the third
quarter, underperforming an 11.6 percent jump in Seoul's main
stock market.
The stock trades at 9.4 times forecast 2007 earnings,
compared to Toyota's 11 times and Honda's 10.9 times, according
to Reuters data.
((Editing by Marie-France Han, Keiron Henderson & Lincoln Feast;
Reuters Messaging: [email protected]; Email:
[email protected]; Tel: +822 3704 5665))
($1=916.4 Won)
Keywords: HYUNDAI RESULTS/