South Korea's Hyundai Motor on Thursday warned of growing business uncertainty due to the Middle East conflict after reporting a 31% drop in first-quarter operating profit.
Its cautious outlook comes after the automaker said earlier this month that its exports to Europe and North Africa, which typically transit through the Middle East, were being disrupted by the conflict in the region, underscoring growing strains on global supply chains.
"Uncertainty is rising higher than ever in the global automobile industry due to the war, U.S. tariffs and other macroeconomic risks," Hyundai Chief Financial Officer Lee Seung-jo said during a post-earnings call with analysts.
Hyundai, which together with affiliate Kia Corp is the world's third-biggest automaking group by sales, posted an operating profit of 2.5 trillion won ($1.7 billion) for the January-March period, compared with 3.6 trillion won a year earlier.
The result matched an LSEG SmartEstimate forecast that is weighted toward analysts who are more consistently accurate.
U.S. tariffs of 15% and supply chain disruptions caused by the Middle East war hit its first-quarter earnings, with a rise in prices for steel, nickel, lithium, platinum and other raw materials having an impact of about 200 billion won on its bottom line, the company said.
Hyundai will not manage to fully make up for lost sales in the Middle East due to the crisis in the region, as manufacturing constraints will not allow it to quickly reallocate sales to other regions, CEO Jose Munoz said earlier this week.
Munoz also said the Middle East market was the automaker's highest-margin market, although not bringing "mass" profits.
Hyundai's exports to the Middle East and Africa accounted for 8% of its total wholesale sales in 2025.
While rising costs hit its bottom line, sales grew 3.4% in the first quarter, helped by robust hybrid vehicle sales that represented about 18% of total shipments, as gasoline prices soared and consumers turned to electric vehicles and hybrids.
Sales of hybrids in the United States accounted for nearly a quarter of its total vehicle sales there, Hyundai said.
($1 = 1,481.1000 won)
(Reporting by Heejin Kim, Joyce Lee and Heekyong; Editing by Ed Davies, Miyoung Kim and Tom Hogue)
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