Hyundai Motor on Thursday reported a disappointing operating result for the first quarter, as costs tied to trade barriers and regional shipping problems eroded margins. The company recorded operating profit of 2.51 trillion won, down from 3.63 trillion won in the prior-year period and below market expectations of 2.81 trillion won.
Revenue for the quarter increased 3.4% to 45.9 trillion won. Management attributed part of the top-line strength to the weaker South Korean won, which supported international sales. Despite higher revenue, net profit fell 23.6% year-on-year to 2.6 trillion won.
Hyundai said its first-quarter results were affected by elevated costs in its largest market by sales, the United States, where the automaker continues to face import tariffs in the range of 15% to 20%. Those levies have increased costs and pressured demand, according to the company.
Executives also pointed to disruptions tied to the ongoing U.S.-Israel war on Iran as a factor, with shipping interruptions in the Middle East reducing sales in that region. CEO Jose Munoz had warned earlier in the week that the company will not be able to fully recover lost Middle East sales resulting from the conflict.
To blunt the impact of higher costs in the U.S., Hyundai has been accelerating plans to expand manufacturing capacity stateside over the past year. The company also continues to rely on India and South Korea as its second- and third-largest markets, respectively.
Hyundai and its sister company Kia Corp operate as the third-largest automaker by global volume, behind Japan's Honda Motor Co Ltd and Toyota Motor Corp. Kia is identified by its market code KS:000270, while Hyundai is listed as KS:005380.
Analysts and investors will be watching how quickly increased U.S. production capacity can offset tariff-driven cost pressures, and whether shipping disruptions in the Middle East remain a drag on regional sales volumes.
Note: The financial figures reported above are drawn from Hyundai Motor's first-quarter results and accompanying statements.