Hyundai Motor Co warned on Thursday of slowing demand and intensifying competition, but stuck to its 2024 earnings target after reporting a 7% fall in third-quarter operating profit, sending its shares down more than 5%.
“The business environment for the car industry is worsening,” Hyundai Motor’s CFO, Lee Seung-jo said during a conference call, also citing growing policy uncertainties and geopolitical risks globally, reports Reuters.
Hyundai Motor, which together with affiliate Kia Corp is the world’s third-biggest automaker by sales, reported operating profit of 3.6 trillion won ($2.6 billion) for July-September, compared with 3.8 trillion won in profit in the same period a year earlier.
The result was also lower than a 3.9 trillion won average of 20 analyst estimates compiled by LSEG SmartEstimate, which is weighted towards estimates from analysts who are more consistently accurate.
The earnings were hurt by warranty costs of 320 billion won for its Santa Fe SUV engines in the United States and increased sales incentives as a global slowdown in car demand weighed.
Hyundai, however, maintained its 2024 target of achieving an operating margin of 8% to 9% this year. Hyundai has posted an operating margin of 8.9% from January to September this year.
Hyundai Motor’s share price extended its decline on Thursday, falling 3.7% after the earnings announcement.
