Hyundai Motor Co., South Korea’s largest carmaker, boosted quarterly profit 46 percent as it won sales from Japanese rivals, outpacing Honda Motor Co., whose production was cut by last month’s record earthquake in Japan.
Hyundai increased net income to 1.88 trillion won ($1.75 billion) in the three months ended March 31 from a revised 1.28 trillion won a year earlier, the Seoul-based company said in a regulatory filing today. The stock jumped 7.3 percent to the highest closing price since it began trading in 1975.
“Chaos brings disorder, and that’s when you see changes in ranks among leaders,” said Lim Jeong Seok, head of equity at KDB Asset Management Co., which oversees the equivalent of $2 billion in Seoul. “The past financial crisis and the recent earthquake may be an opportunity for Hyundai to pass bigger rivals.”
Hyundai increased global vehicle sales about 9 percent last quarter from a year earlier after adding new models including the Grandeur premium sedan in South Korea and the Accent small car in China. The carmaker may extend sales gains as Toyota Motor Corp., Nissan Motor Co. and Honda curtail production following the March 11 earthquake.
Honda, Japan’s third-largest carmaker, reported fourth- quarter profit that missed analyst estimates. The Tokyo-based automaker’s net income plunged 38 percent to 44.5 billion yen ($545 million) for the three months ended March 31, lower than the 93.8 billion yen average of analyst estimates compiled by Bloomberg. Revenue fell 2.9 percent, while Hyundai’s gained 21 percent in the same period.
Hyundai Outsells Honda
Hyundai boosted vehicle sales in the January-March period to 919,000, outselling Honda, whose global deliveries fell 1.6 percent to 860,000, according to the companies. A year earlier, Honda outsold Hyundai 874,000 to 842,000.
Japanese carmakers are working to restore full operations after the magnitude-9 earthquake and tsunami damaged parts factories and power plants, causing shortages of components and electricity. Honda said earlier this week it expects its global output to return to normal levels by the end of the year.
“Even if production comes back, sales may not” in Japan, said Yuuki Sakurai, president at Fukoku Capital Management Inc. in Tokyo. “May sales, June sales may be close to zero as the companies won’t have much to sell.”
Honda’s sales drop in the fourth quarter was led by a 22 percent decline in Japan from a year earlier, when a government subsidy program for car purchases helped boost domestic sales. Deliveries rose 7.9 percent in North America to 356,000 vehicles and 0.4 percent in Asia, excluding Japan, to 238,000.
Hyundai Shares Surge
Hyundai rose 7.3 percent to 250,500 won at the 3 p.m. close of trading in Seoul, extending a 44 percent gain this year. That compares with the benchmark Kospi index’s 7.7 percent year-to- date increase.
Honda rose 2.9 percent to close at 3,190 yen in Tokyo before the earnings announcement. The stock has dropped 6.2 percent since March 10, the day before the earthquake.
Honda’s output in Japan plunged 63 percent from a year earlier to 34,754 vehicles in March, the carmaker said earlier this week. The company’s output of cars and parts in Japan will remain at 50 percent of regular capacity until the end of June.
“We are in a situation where our supply is short when demand for cars is increasing globally,” Managing Director Fumihiko Ike told reporters in Tokyo today.
Honda declined to provide a full-year earnings forecast, citing the impact of the natural disaster on production. The earthquake cost Honda 45.7 billion yen in the year ended March 31, the company said.
The Japanese carmaker’s cash position may become “strained” over the next six months, given depressed production levels, Ike said. Honda obtained board approval today to issue as much as 200 billion yen in commercial paper “just in case” the need arises, and has no immediate plans to do so, he said.
For the fiscal year ended March 31, net income almost doubled to 534 billion yen, while sales gained 4.2 percent to 8.94 trillion yen, Honda said.
Toyota, the world’s biggest automaker, also estimates production will remain below normal levels until November or December. The Toyota City, Japan-based company may lose output of 300,000 vehicles in Japan and 100,000 overseas through the end of April due to quake-related shutdowns, Executive Vice President Atsushi Niimi said last week.
Toyota is unlikely to meet its full-year global production target of 7.7 million vehicles, he said. About 150 parts, mostly materials such as rubber and plastics, are still in critically short supply, President Akio Toyoda said April 22.
Toyota will report fourth-quarter earnings on May 11.
Japan’s automakers also face possible blackouts after the natural disaster reduced the nation’s power-generating capacity by 8 percent. The carmakers are considering electricity-saving options such as shutting plants and offices for two days a week and shifting work to weekends to conserve power. Honda expects a 25 percent power-supply reduction this summer, Ike said.
The natural disaster has had little impact on Honda’s operations in China, the world’s biggest auto market, where no production halts are planned until the end of May at the earliest, Seiji Kuraishi, the company’s president for China, said at the Shanghai auto show last week.
Honda hasn’t revised its full-year China sales forecast of 730,000 vehicles, Kuraishi said. Even if parts shortages reduce the supply of vehicles, it can be made up for in the second half of the year, he said. The carmaker boosted output in China 12 percent last month to 73,032 vehicles.
Separately, Mazda Motor Corp. said it posted a net loss of 62.8 billion yen in the three months ended March 31, on sales of 607.8 billion yen.
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