South Korean carmaker Hyundai Motor bucked a sluggish industry trend in Europe and China and boosted sales in a recovering U.S. market to push up quarterly net profit by almost a third to $2.15 billion, its highest since changing accounting methods a year ago.
Shares in Hyundai have risen close to 13 per cent this month, hitting a life high of 269,500 won, while Japanese rivals Toyota Motor, Honda Motor and Nissan Motor, as well as Ford, General Motors and Volkswagen have all fallen.
Once derided for its poor quality, boxy cars, Hyundai, under chairman Chung Mong-koo, has moved up the quality ladder and is envied by rivals for offering stylish models at affordable prices even during an industry downturn.
Its operating margin of around 10.5 per cent is more than four times that of Toyota.
The maker of the Sonata sedan and Elantra and i30 compacts has also benefited from a cheaper South Korean won and free trade deals with Europe and the United States.
The world's fifth-biggest automaker with affiliate Kia Motors posted a 2.45 trillion won net profit for January-March, compared with a consensus forecast of 2.07 trillion won from Thomson Reuters I/B/E/S, and up from 1.88 trillion won a year earlier.
After a period of breakneck growth, Hyundai's engine is slowing, but not stalling. Net profit is expected to grow 9 per cent to a record 8.85 trillion won this year, though that pace of growth will be just a quarter of last year's, according to Thomson Reuters SmartEstimates.
Hyundai's sales in its home market skidded 7 percent. A year ago, domestic sales accounted for 16 per cent of Hyundai's total, and the captive market - where 8 out of every 10 cars is a Hyundai or a Kia - has helped fund the group's overseas growth.
"There's no reason why Hyundai can't continue this upward trend in the second quarter. The U.S. market looks fine and although there are slowdown concerns in Europe and China, in China foreign brands like Hyundai are performing well," said Kim Dae-hwan, fund manager at Shinyoung Asset Management.
On an earnings call, Hyundai's chief financial officer Lee Won-hee said global demand for cars this year would increase by 5.6 percent - more than has generally been forecast - driven by the United States and China.
BUCKING THE TREND
From Europe to China, the world's biggest auto market, Hyundai is shifting more cars while industry sales sputter.
In Europe, industry sales dropped 8 per cent in the first quarter, but Hyundai posted double-digit sales growth, and is expected to post more gains thanks to new models such as the fully-revamped i30 compact.
French automakers PSA Peugeot Citroen and Renault this week reported their quarterly sales slumped - Peugeot down 7 per cent and Renault down 8.6 per cent - in a sagging European market. The French market alone shrank by nearly a fifth in January-March.
Hyundai also increased its Chinese sales in January-March, in a market that shrank 1.3 per cent, analysts have said.
Hyundai plans to start production at new plants in China and Brazil this year, after a new factory went into production in Russia last year, but is has capped its global production capacity at 7 million vehicles, saying it doesn't want to follow Toyota, once its benchmark, which suffered from a major recall crisis after it ramped up global capacity.
In the United States, Ford and others have also upgraded their 2012 sales goals after an unexpectedly strong first quarter as drivers finally put the 2008-09 downturn behind them and began replacing ageing gas guzzlers.
Hyundai increased its U.S. sales by 15 per cent in January-March, edging the overall market's 14 per cent gain, but its market share slipped to 4.7 per cent from 5.1 per cent as its stretched production capacity meant it couldn't readily boost output.
Hyundai has taken full competitive advantage of a cheaper South Korean won, but its Japanese rivals are fast recovering from last year's natural disaster setbacks and should report much improved January-March profits.
The current quarter outlook is bright, with strong seasonal demand and the launch of new models including a revamped sleeker-looking Santa Fe sport utility vehicle.
Hyundai shares rose 2.1 per cent on Thursday in a broader market that slipped 0.1 per cent.