Hyundai Motor Rose Its Net Income

Hyundai Motor Co. rose its net income on 29 percent as South Korea's largest automaker reduced costs and sold more Santa Fes, Sonatas and other pricier vehicles. Profit probably rose to 431.1 billion won ($367 million) in the three months ended June 30 from 334.5 billion won in the year- ago quarter.The South Korean government's tax cuts since November have encouraged consumers to spend more on Hyundai Motor's sedans and sport-utility vehicles. Yet a stronger won against the dollar, which helped the automaker reduce debt payments in the first half, threatens to undermine third-quarter earnings because it reduces the value of overseas sales when the proceeds are repatriated. The won was an average 2.9 percent stronger against the U.S. dollar in the second quarter than a year earlier. The currency has strengthened almost 11 percent against the dollar this year. Hyundai Motor shares rose as much as 5.7 percent to 35,300 won, the highest intraday level in two weeks. Before today, the stock had risen 24 percent since the beginning of this year, outpacing a 4 percent rise in the benchmark Kospi. More than half of Hyundai Motor's sales come from exports, and a fifth goes to the U.S., its biggest export market. Hyundai Motor sold 814,809 of its Santa Fe, Sonata and other vehicles in the first six months, 1.3 percent more than a year earlier. Sales in the U.S. rose 16 percent to 190,109 units. Hyundai focused more on sales in South Korea in the first half because of the local tax cut. With the lower tax due to expire at the end of August, analysts expect Hyundai to increase exports in the second half. Hyundai Motor this year plans to sell 1.75 million vehicles, of which 950,000 will probably be exports. In 2001, it sold 1.6 million vehicles at home and abroad. The automaker lost about 550 billion won in sales last month when unions refused to work overtime and staged sporadic walkouts for three weeks. The dispute made it tougher for Hyundai Motor to clear an order backlog that has left buyers waiting as long as three months for their cars.