Hyundai Motor on Thursday posted a steep drop of more than 20 percent in fourth quarter profits as a strong won continued to blunt its price competitiveness against Japanese rivals.

Net profit for the October-December period was down 22.2 percent from a year ago at 1.65 trillion won ($1.51 billion), South Korea’s largest automaker said in a statement.

Operating profit also tumbled 7.6 percent year-on-year to 1.88 trillion won, while sales rose 7.5 percent to 23.6 trillion won, it said.

The company, which along with its smaller affiliate Kia is the world’s fifth-largest automaker, has for the past decade steadily expanded its presence in the global market including the US, nipping at the heels of Japanese giants like Toyota and Honda.

But it has struggled recently as a strong won and a weak yen has eroded its price competitiveness against Japanese rivals in overseas markets. The won last year hit its highest level against the yen since 2007.ย 

Hyundai said it faced an uphill battle in 2015, as foreign carmakers seek to expand in the domestic Korean market and competition escalates overseas.

“It is believed the sales environment this year will continue to remain unfavourable,” the company said, setting a worldwide sales target of 5.05 million vehicles.

The company sold 4.96 million vehicles in 2014, while operating profit for the whole year tumbled 9.2 percent to 7.5 trillion won — the lowest since 2010.

Shares of Hyundai Motor shed 2.04 percent to close at 168,000 won Thursday on disappointment over the earnings.ย 

Hyundai stocks took a dive last year after the firm spent a whopping $10 billion to buy a large plot of state-owned land in Seoul where it plans to build a giant complex.ย 

In a move to appease investors angered by the costly deal, Hyundai chief financial officer Lee Won-Hee said Thursday that the firm planned to increase its dividend by about 54 percent this year to 3,000 won per share.

“This is not one-off offer…we are planning to gradually increase the dividend,” Lee said.

Hyundai had earlier announced plans to build two more plants in China — the world’s top auto market where Hyundai currently operates three factories.ย 

Construction for the new plants — one in Cangzhou, Hebei, and the other in Chongqing — will begin this year, Lee said.ย 

“We will expand production capacity to meet growing demand in China and to compete against companies like General Motors and Volkswagen,” he said.ย 

Each plant will have an annual production capacity of 300,000 vehicles, with the Cangzhou plant expected to begin production in 2016.ย 

The Chongqing plant will open in the first quarter of 2017, Lee said. –ย Agence France-Presse

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