Hyundai Motor India misses quarterly profit view on rising raw material, labour costs

Hyundai Motor India reported a smaller-than-expected third-quarter profit on Monday, weighed down by higher raw material and employee-related costs, even as strong exports helped the company beat revenue estimates.

Profit rose 6.4% to 12.34 billion rupees ($134.8 million) for the quarter ended December, but fell below analysts’ expectation of 13.93 billion rupees, according to data compiled by LSEG.

Rising costs of key raw materials have taken the sheen off a strong quarter for Indian carmakers, during which domestic sales rose about 21% to a record high.

Last week, Indian car market leader Maruti Suzuki warned of higher steel and aluminium costs, while also flagging rising import costs due to China’s export curbs on rare earth magnets.

Hyundai India, a unit of South Korea’s Hyundai Motor , said expenses rose 8% during the quarter, with raw material costs spiking 14.8%.

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Employee benefits expenses climbed 15.2% to 6.99 billion rupees as Hyundai recognised the impact of India’s newly enacted labour codes. It did not share further details on the impact.

Quarterly revenue for the October-December period stood at 179.73 billion rupees, topping analysts’ estimate of 178.41 billion rupees, on the back of strong exports.

Shares jumped 1.3%, compared to a 0.2% rise before the results.

Overseas shipments were up 21% during the quarter, lifting total sales 5% higher. Domestic sales, on the other hand, were flat, hurt by competition from Tata Motors Passenger Vehicles and Mahindra & Mahindra’s newer,

features-loaded utility vehicles.

Analysts have also pointed to Hyundai’s increased reliance on its top-selling Creta SUV.

India is a key market for Hyundai, where it plans to pump about $5 billion to launch some 26 models by 2030 and claw back market share from its rivals, while also making it a global manufacturing hub.