Hyundai Q1 Profit Plummets 31% and Signals West Asia Conflict Concerns
Hyundai Motor of South Korea issued a cautionary note on Thursday regarding increasing business uncertainty stemming from the conflict in West Asia, following a reported 31 percent decline in operating profit for the first quarter. The automaker’s cautious outlook follows its earlier announcement this month regarding disruptions to its exports to Europe and North Africa, which usually pass through West Asia, highlighting the increasing pressures on global supply chains due to the ongoing conflict in the region.
“Uncertainty is rising higher than ever in the global automobile industry due to the war, US tariffs and other macroeconomic risks,” stated Lee Seung-jo during a post-earnings call with analysts. Hyundai, along with its affiliate Kia Corp, ranks as the world’s third-largest automaking group by sales, reporting an operating profit of 2.5 trillion won for the January-March period, a decline from 3.6 trillion won in the same quarter of the previous year. The outcome aligned with an LSEG SmartEstimate projection, which gives greater weight to analysts with a track record of consistent accuracy.
US tariffs of 15 per cent and supply chain disruptions stemming from the West Asia conflict adversely affected first-quarter earnings, with price increases for steel, nickel, lithium, platinum, and other raw materials impacting the bottom line by approximately 200 billion won, according to the company. Hyundai is unlikely to completely recover lost sales in West Asia as a result of the ongoing crisis in the region, given that manufacturing constraints will hinder the swift reallocation of sales to alternative markets, according to CEO Jose Munoz.
