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UPDATE 3-Hyundai shares jump to record high after profit surge

Published 04/28/2011, 02:25 AM
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* Q1 net profit 1.88 trln won vs 1.28 trln won year go

* Strong global sales of new models, market recovery lift earnings

* Hyundai, Kia biggest beneficiaries from Japan's output slump-analysts

* Hyundai shares gain 7.28 pct fter results (Adds background, comments)

By Hyunjoo Jin

SEOUL, April 28 (Reuters) - Hyundai Motor Co reported a 47 percent jump in quarterly profit on Thursday, sending its shares to a record high, with investors betting earnings will continue to grow as Japanese rivals struggle with a production slump.

The South Korean firm is less reliant on Japanese parts than other global car makers such as General Motors and Hyundai is widely seen among the biggest beneficiaries of a prolonged disruption in Japanese output this year following the March 11 earthquake.

"Hyundai has been emerging as an alternative to Japanese cars, shaking off its image as a maker of cheap cars," said Lee Dong-jin, a fund manager at KTB Asset Management. "It's now seeing some benefits from increasing production at overseas plants while the world took a hit from the financial crisis."

After the results were announced, Hyundai shares ended 7.3 percent higher at an historic high. The stock has risen more than a third this year, comfortably beating an 8 percent rise in the KOSPI .

"Hyundai shares have overshot in recent days, but I think the upward trend will continue," Lee said.

Honda Motor Co , Japan's No.3 automaker and fourth-biggest in the U.S. market, said on Monday it would take until the end of the year before production returned to normal, echoing recent comments from Toyota . [ID:nL3E7FM0CG] Honda reports later on Thursday.

Hyundai reported a 1.88 trillion Korean won ($1.7 billion)in January-March net profit, compared with 1.28 trillion won a year ago.

Hyundai was reporting earnings on a consolidated basis to reflect earnings of its affiliates including financial operations under new accounting rules, and there were no consensus guidelines for the result.

Hyundai outperformed its global peers in the last quarter thanks to popular models such as the Sonata mid-sized sedan and the Elantra compact in the United States, South Korea and other markets.

The company said sales were especially good in the United States and China last quarter, rising by 28 percent and 30 percent respectively, while its overall global sales rose 10 percent from a year ago.

Hyundai Motor's chief financial officer, Lee Won-hee said industry sales could to grow to 13 million units this year in the United States.

He reiterated that the company had no plan to build a new plant in the United States, although it could consider such a move if the market continued to recover.

Hyundai's stellar results came despite the appreciation of the South Korean won, which rose 3.2 percent against the dollar as of the end of the first quarter from a year earlier.

"The first quarter earnings are very good and the outlook is even rosier...(but) one risk factor is exchange rate trends, since export markets account for a large part of Hyundai Motor's earnings," said Kang Sun-sik, chief analyst at Woori Asset Management.

($1 = 1077.550 Korean Won) (Additionial reporting by Jungyoun Park, Ju-min Park and Yerim Kim; Editing by Matt Driskill and Jonathan Hopfner)

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