South Korea's Hyundai Motor said its net profit fell by the most in five quarters, as the local currency's sharp gain and higher U.S. discounts to entice customers overshadowed solid April-June vehicle sales in China and at home.
Hyundai Motor, the world's fifth-biggest automaker combined with affiliate Kia Motors, on Thursday reported a 2.24 trillion Korean won ($2.18 billion) net profit for the second quarter, down nearly 7 percent from a year earlier. That was lower than a consensus forecast of 2.33 trillion won, according to a Reuters poll of 16 analysts.
The fall is the biggest since Hyundai Motor's net profit slumped 16 percent in the first quarter of last year, squeezed by massive U.S. recalls and labor disputes in South Korea.
The won's value jumped by 12.9 percent against the dollar in the second quarter compared with a year before, its biggest year-on-year climb since the second quarter of 2011. That saps overseas earnings when converted back into the local currency.
Another factor cutting into profit was growth in financing packages offered to lure U.S. car buyers. Incentives, soaked up by Hyundai, hit their highest level in more than four years as the automaker offered discounts to reduce an inventory of the aging Sonata sedan ahead of the rollout of the model's new version, according to Edmunds.com.
Shares in Hyundai Motor fell 0.7 percent after the earnings announcement, trailing a 0.2 percent decline in the broader market.