SEOUL (Reuters) - South Korea's Hyundai Motor surprised the market on Thursday by swinging to its first quarterly net loss since at least 2011 as its vehicle sales skidded in the key China market.
China's sputtering car market adds to the troubles of Hyundai, which has been already grappling with the lack of attractive models and strong brands in its biggest market.
Hyundai, which together with affiliate Kia Motors used to be the third-biggest automaker in China, is now saddled with overcapacity, with its 2018 China sales falling short of target and reaching only half of its total production capacity.
Hyundai, the world's No.5 automaker along with affiliate Kia Motors Corp, reported a net loss of 129.8 billion won ($114.95 million) for the fourth quarter ended in December, compared with the average 784 billion profit estimate of 14 analysts based on I/B/E/S Refinitiv data.
It was the automaker's first net loss since it changed the accounting method in 2011.
For the full year, its net profit tumbled 63 percent to 1.5 trillion won, marking its sixth consecutive annual net profit fall.
Its quarterly operating profit fell 35 percent to 501 billion won and sales climbed 5 percent to 25.67 trillion won.
China, the world's biggest auto market, contracted for the first time in more than two decades last year, hit by the Sino-U.S. trade war and the phasing out of purchase tax cuts on smaller cars.
Hyundai sold 790,000 vehicles in China last year - lower than its target of 900,000 and almost flat from its six-year-low of 785,000 in 2017 when Seoul's diplomatic row with Beijing hurt consumer sentiment about Korean products. Hyundai's total capacity is 1.65 million vehicles in China.
Last year, Hyundai's longtime China vice chairman Hsueh Yung-hsing resigned as part of a sweeping executive reshuffle under heir apparent Euisun Chung.
Hyundai's U.S. sales slipped 1 percent last year, versus the market's 0.2 percent fall, with the automaker's redesigned Santa Fe SUV failing to live up to its expectations.
The automaker is also bracing for potential U.S. tariffs on vehicle imports and a U.S. investigation over how it handled a recall over engine defects.
Hyundai and Kia, which together rank fifth in global sales, aim for a 3 percent sales growth this year - another tepid rise after they missed their sales goal for a fourth consecutive year last year.
Hyundai Motor shares fell 2.3 percent after the earnings announcement on Thursday.
($1 = 1,060.1000 won)
(Reporting by Hyunjoo Jin; Editing by Muralikumar Anantharaman)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)