* Q3 net profit 2.17 trln won vs 2.13 trln won fcast
Q3 revenue up 3.6 pct to 19.6 trln won
* Sees European autos market falling 8 pct this year
* Hyundai shares up 3.9 pct after recent battering
By Hyunjoo Jin
SEOUL, Oct 25 (Reuters) - Hyundai Motor Co increased its quarterly net profit by 13 percent to $2 billion, squeezing overseas capacity to keep sales going despite damaging labour strikes at home.
The South Korean firm, which with affiliate Kia Motors is the world's fifth-biggest car maker, has outperformed in an industry battered by Europe's debt crisis - even Volkswagen and Daimler are feeling the pinch - but investors are concerned about a go-slow strategy on expanding capacity.
Hyundai has not announced plans for a new plant for at least two years, as it focuses on brand and quality rather than aggressively chasing market share - but this has left it short of cars to sell into a recovering U.S. market, where Japanese rivals have muscled back in, as well as in emerging markets.
In a summary note this week, Standard & Poor's forecast Hyundai and Kia would lose global market share by 2014.
``With its growth rate moderating on limited capacity and the global economy weakening, it'll be a challenge for Hyundai to come up with a magic growth formula,'' said Ohm Joon-o, a fund manager at Kiwoom Asset Management, which holds Hyundai stock.
On Thursday, hours after a bleak day for European brands - with Ford announcing a plant closure, Peugeot accepting state aid and Volkswagen posting a big drop in profits - Hyundai said its July-September net profit rose to 2.17 trillion won, a touch above market forecasts and up on last year's 1.92 trillion won.
GROWTH ENGINE STALLING
Hyundai, led by founding family member Chung Mong-koo, bucked the industry slump in Europe and drove up sales in China as Japanese rivals were hit by a popular backlash in a dispute over islands in the East China Sea. Chief Financial Officer Lee Won-hee acknowledged Hyundai benefited from the Japan-China dispute, and would this year report higher-than-expected sales in the world's biggest autos market.
``Hyundai will return to record earnings in the current quarter,'' said Kim Seung-hwan, analyst at Golden Bridge Investment & Securities. ``But the problem is next year. Investors are concerned that Hyundai's growth momentum will stall, which is reflected in the recent share price slump.''
Hyundai shares closed up 3.9 percent on Thursday - their biggest one-day gain in 6 weeks - but have slumped 10 percent this month, underperforming the KOSPI index and Japanese rivals Honda Motor Co Ltd, Nissan Motor Co Ltd and Toyota Motor Corp, as investors fret over the group's long-term growth strategy.
HITTING THE SKIDS
Hyundai expects the global autos market will grow at 3.6 percent next year, slowing from an expected 5.1 percent this year. The European market will shrink by 8 percent this year, b u t by less than 2 percent next year, it said. Hyundai last month slashed its European targets for this year and next, in no way immune from the chill winds of the region's debt crisis.
Overall, Lee said Hyundai would beat its global sales target of 4.29 million vehicles this year.
Analysts warned of a potential earnings hit from an appreciating won currency, which on Thursday broke through the 1,100 level versus the dollar - its strongest in more than a year.
``If the won appreciates further, Hyundai's earnings will decrease,'' said Jung Sang-jin, a fund manager at Dongbu Asset Management, adding Hyundai's earnings will dip next year as the autos market sees ever tougher competition.
While earnings should pick up speed in the current quarter as buyers like the value-for-money a Hyundai car offers in a weak economy, the company's reluctance to expand capacity significantly has investors worried about its ability to sustain strong profit growth over the long-term.
Global sales growth this year and next will be some way below the double-digit growth in 2009 to 2011, according to analysts' estimates compiled by Reuters, and net profit growth is seen slowing to 8 percent next year, from an estimated 14 percent this year and 35 percent last year.
Hyundai is the first of Asia's global automakers to report quarterly earnings. Honda comes out on Monday, with Toyota and Nissan due on Nov. 5 and Nov. 6, respectively.