Hyundai earnings drop on recall costs, currencies


SEOUL • Hyundai Motor Co’s third-quarter earnings missed analysts’ estimates, hit by rising costs for recalls and weaker emerging-market (EM) currencies.

The stock slumped after the Seoul-based automaker said it had expenses of about 500 billion won (RM1.83 billion) for recalls related to airbag control units and engine issues, as well as a new safety system that will be widely applied to new cars and some vehicles which were already sold.

The results are set to intensify analysts’ concerns about the company’s profitability, with operating margins hovering at about 3% in recent quarters. Hyundai said it will seek to improve sales with new SUVs including a Genesis and a large SUV.

While Hyundai has been trying to reverse slumping sales in China and the US, the effort comes at a difficult time with demand cooling in the world’s two largest auto markets amid an economic slowdown and trade tensions.

The carmaker has also warned that the potential car tariffs considered by the US would be “devastating”. It again warned investors about “uncertainties in business environments”. Weaker EM currencies also dragged down Hyundai’s revenue in the quarter.

As part of its efforts to hedge risks, Hyundai plans to export some cars produced in Turkey to other countries.

The shares fell as much as 12.4%, the biggest drop since the global financial crisis in 2008, and were down 6% at the close in Seoul. They’ve lost 29% this year.