hyundai kia expected to post slow profit growth in 2013
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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Hyundai, Kia expected to post slow profit growth in 2013

Arab Today, arab today

Arab Today, arab today Hyundai, Kia expected to post slow profit growth in 2013

Seoul - Yonhap

South Korea's top automaker Hyundai Motor Co. and its affiliate Kia Motors Corp. are expected to post the weakest growth in operating profits among global carmakers this year due to escalating competition from Japanese rivals, a report showed Tuesday. According to the report from local analysts, the operating profit of Hyundai and Kia is expected to grow 7 percent and 5.7 percent on average, respectively, during the 2012-2014 period. The figures are the lowest among global automakers with the operating profit of French automaker Renault SA expected to grow at the fastest rate of 28.9 percent over the cited period. The analysts said such a low profit growth of the South Korean automakers results mainly from growing competition from Japanese carmakers, who recently regained their price competitiveness on the continued depreciation of the Japanese yen against the U.S. dollar. Earlier reports said the Japanese currency traded at 95.25 yen per dollar on Friday, down 21.5 percent from 78.38 yen quoted on Sept. 19 while its value against the Korean won tumbled 23.5 percent as of end-February from early June last year. Consequently, the operating profits of all major Japanese automakers are expected to grow at a double-digit rate this year with those of Toyota Motor Corp. estimated to grow 27.9 percent and Honda Motors Co. to expand 23.7 percent, the report said. The report also showed shares of Hyundai and Kia remained significantly undervalued when compared with those of other global automakers. The price-earnings ratio (PER) of Hyundai and Kia were 6.15 and 5.6, respectively, while those of their Japanese competitors Toyota and Honda were 12 and 11.3, the highest among global automakers. The average PER of all major global automakers was 9.1. "Previously, undervaluation (of Hyundai and Kia stocks) only made them more attractive, but it no longer has the same effect as their low valuation is caused by their low growth outlooks," said Kang Sang-min, a Seoul-based auto analyst. "To overcome such a difficulty, the companies must work to grow in both quality and quantity."

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