Hyundai Motor Co.’s share price down, posts first-quarter profit that misses analysts’ expectations amid strong won performance

Hyundai Motor Co., which is the biggest car manufacturer in South Korea and fifth-largest auto maker in the world, posted its first-quarter results that failed to meet analysts estimates due to the influence of the strong South Korean won on the companys earnings.

Hyundai Motor Co. said in its statement, which was cited by the Wall Street Journal: “We expect business conditions to worsen in the second quarter because of increased foreign exchange volatility.”

The company announced that its first-quarter net profit decreased by 2.9% because it became less competitive in overseas markets due to the strong performance of its home markets currency. It failed to meet the analysts estimates of 2.12 trillion won.

According to the companys statement, its operating profit on a consolidated basis increased by 3.7% from 1.87 to 1.94 trillion won. Hyundai also shared that its sales rose by 1.3% from 21.37 to 21.65 trillion won.

Over the past year, the South Korean won had a strong performance against every major currency, except for the British pound. This made the competitiveness of Hyundai Motor Co. harder in some markets such as China. The company also posted the most conservative target for its annual sales growth in about 10 years. Moreover, if the won continues to consolidate its positions, the company will most likely face a number of operating challenges.

Hyundai Motors Co. is also expected focus on bringing back its reach in the U.S., which after all, is the companys second-biggest overseas market. The march of the company in this direction already began earlier in 2014 with its U.S. Chief Executive Officers replacement after several vehicle withdrawals and decreasing market share.

Hyundai Motor Co. was 1.22% down to close at 245 000 South Korean won per share yesterday, marking a one-year change of +32.43%. According to the information published on the Financial Times, the 31 analysts offering 12-month price targets for Hyundai Motor Co. have a median target of 300,000, with a high estimate of 330,000 and a low estimate of 250,000. The median estimate represents a 22.45% increase from the last price of 245,000.