Hyundai Motor’s 2Q earnings down 24 percent

The auto giant’s operating profit slipped more than 16 percent from the previous year to roughly 1-and-a-half billion U.S. dollars, while sales rose just point-3 percent to slightly under 20 billion.

The company said profitability would increase in the third quarter with the launch of upgraded models of its flagship K5 passenger cars and Sportage utility vehicles. While its rivals cash in on a global SUV boom, spurred in part by cheaper fuel in recent months, Hyundai has grappled with a lack of production capacity and few new models.

Most of the Chinese auto market’s growth is coming from domestic vehicle sales while foreign brands are losing market share, reversing a trend for local automakers to lose ground. The company hasn’t disclosed the launch date.

The automaker said its sales target in China needs to be revised down. He didn’t provide figures.

It sold 2.42 million vehicles during the first half of this year, down 3 percent over a year earlier.

Hyundai said sales to China – its biggest market – dropped by around 8 percent in the quarter as competition intensified and growth in the world’s second-largest economy slowed.

“With unfavourable economic situations, such as a stronger won, poised to continue, it seems unlikely that Hyundai’s sales will drastically improve anytime soon”, Lee Sang Hun, an analyst at IBK Securities Co., told Bloomberg before the earnings announcement.

In a move to soothe investor concerns, the automaker said earlier on Thursday it will pay an interim dividend for the first time, of 1,000 won per share.

The decision also comes as Hyundai has faced investor criticism of its weak corporate governance, particularly in light of its $10 billion land purchase for new headquarters a year ago. Numerous reports later showed the companies paid about triple the initial appraised price, besting by more than double the rivaling bid from Souith Korean technology behemoth Samsung Electronics.