UPDATE 3-Hyundai posts record Q1 net on emerging mkt, US gains

* Operating profit 702.7 bln won vs 573.6 bln won f’cast

* Net profit jumps five-fold to record 1.1 trln won

* Expects to meet 2010 sales target with new model launches

* Ups Q1 global market share to 4.8 pct vs 4.7 pct yr ago

* Hyundai shares up slightly after results, near record
(Adds details on overseas units’ sales, P/E ratios)

By Kim Yeon-hee

SEOUL, April 22 (BestGrowthStock) – Hyundai Motor Co’s (005380.KS: )
strong performance in emerging economies and growing U.S.
market share drove it to a record net profit in the first
quarter and should cushion it from a stronger won and rising
input costs.

South Korea’s Hyundai was one of the few winners during an
industry-wide slump last year, winning customers with a line-up
of smaller, cheaper models and clever marketing that helped it
consistently exceed analysts’ forecasts.

It beat forecasts again on Thursday with a five-fold rise
in March quarter earnings as Toyota Motor Co (7203.T: ) grappled
with its safety and recall crisis.

“Looking at such a big rise in sales, Hyundai may have
succeeded in grabbing market share from Toyota,” said Ryosuke
Okazaki, chief investment officer of ITC Investment Partners in

“If Hyundai can continue taking market share as Toyota lags
behind, I’m sure Hyundai can continue to post strong results
throughout the rest of the year.”

But with the won (KRW=: ) rising, steelmakers looking to pass
on higher costs and government subsidies in its lucrative home
market cut, Hyundai faces a tougher time in the second half.

Hyundai’s impressive earnings came as Moody’s Investors
Service cut Toyota’s credit ratings, saying it expected low
profitability at the world’s largest automaker to continue and
that litigation costs related to its recalls could be
significant. [ID:nTOE63L03A]

Toyota is set to report January-March results on May 11.

Hyundai, with affiliate Kia Motors (000270.KS: ) the world’s
fifth largest carmaker, scored record sales in the United
States last month with the launch of the revamped Sonata sedan
and Tucson sport utility vehicle.


Hyundai said it would not respond head-on to Toyota’s
generous sales incentives in the U.S. market, which boosted the
Japanese carmaker’s sales last month.

“We will increase market share with new model launches
which will gather pace from the second half and strengthen cost
management to shore up profitability,” Hyundai said in a

Hyundai scaled back U.S. sales incentives on YF Sonata and
Tucson ix by 34 percent in the first quarter, driving its
profit margin to 8.3 percent from 2.5 percent a year ago.

Upgraded models tend to carry higher price tags even with
simple addition to functions, therefore boosting margins.

The company is due to introduce the upgraded models of
compact Elantra, its best-selling foreign car, and Azera in the
coming months.

For graphic on results: http://link.reuters.com/xuk88j
For graphic on Hyundai sales: http://link.reuters.com/duh26j
For graphic on US sales: http://link.reuters.com/myk88j
For Reuters Insider: Kia Sales Growth May Outpace:


“Hyundai is expected to keep showing quarterly profit
growth on more capacity and a better product mix, although
growth may slow a bit,” said Hong Seong-yeob, head of equity
management division at KB Asset Management.

Hyundai’s cost structure is set to improve as more new cars
are built on an integrated platform, while an increase in
overseas production will ease the blow from the stronger won,
analysts say.

Hyundai earned a 702.7 billion won ($634.4 million)
operating profit in the quarter ended March, versus 153.8
billion won a year ago, it said on Thursday.

The results easily beat a mean forecast of 573.6 billion
won from 25 analysts surveyed by Thomson Reuters I/B/E/S. Net
profit jumped five-fold to a record 1.1 trillion won from a
year ago.

Sales at its China unit, in which Hyundai has a 50 percent
stake, grew 23 percent and profit more than doubled.

Its fully-owned India and Czech plants swung to profits,
logging a 21 percent and 59 percent jump in sales,

Shares in Hyundai, which leapt to a record earlier this
month, were little changed after the results, closng up 0.4
percent versus a 0.5 percent fall in the KOSPI (.KS11: ).

Ahead of the results, Hyundai was forecast to post a 9
percent rise in operating profit to 2.4 trillion won this year,
according to Thomson Reuters I/B/E/S. Based on 2011 earnings
forecasts, it trades on a price to earnings ratio of about 8.9
times versus Toyota at 25.3 and Honda (7267.T: ) at 15.2 times.

Chung Mong-koo, the 71-year-old chairman of Hyundai Motor,
has been making trips to the company’s global assembly lines
and sales networks every month in an effort to maintain the
company’s strong growth.

His only son and deputy chairman of the carmaker, Chung
Eui-sun, tends to make presentations for its new cars in almost
every auto show, in contrast to his father who largely avoids
the public spotlight.

Stock Market

($1=1107.6 Won)
(Additional reporting by Chikafumi Hodo in TOKYO and Cheon
Jong-woo in SEOUL; Editing by Jonathan Hopfner and Lincoln

UPDATE 3-Hyundai posts record Q1 net on emerging mkt, US gains