July 26, 2016 / 5:36 AM / 2 years ago

UPDATE 1-Hyundai Motor posts 10th straight profit drop, warns H2 could be tough

* Q2 net profit 1.66 trln won vs 1.7 trln won a year ago

* Profit just short of 1.67 trln won consensus forecast

* S. Korean automaker hit by weak sedan sales in US, at home

* Sees Brexit vote clouding outlook for second half

* Q2 operating profit edges up; shares rise

By Hyunjoo Jin

SEOUL, July 26 (Reuters) - South Korean automaker Hyundai Motor slipped to its 10th straight profit drop in the second quarter as it soaked up stiff competition and shrinking demand for its mainstay sedans in United States and at home.

Hyundai, the world’s fifth-biggest automaker together with affiliate Kia Motors, said on Tuesday its April-June net profit slipped to 1.66 trillion won ($1.46 billion) from 1.70 trillion won a year ago, just below a consensus forecast of 1.67 trillion won from a Reuters’ poll of 19 analysts.

The automaker had bet on new sedans like the Elantra and the Sonata to help it reverse out of its lengthening slowdown. But low oil prices have prompted consumers in the United States - the firm’s second-biggest market - to switch to gas-guzzling sport utility vehicles and pickup trucks, hitting Hyundai harder than peers because of its heavier reliance on sedan sales.

Hyundai said on Tuesday it plans to expand its supply of SUVs to meet growing demand. But it warned the second half of the year could be tough as Britain’s June 23 vote to leave the European Union had clouded the outlook for business in the region.

The automaker said revenue rose 8 percent from the same period a year ago to 24.68 trillion won, while operating profit inched up 0.6 percent to 1.76 trillion won during the period.

Hyundai’s profit squeeze comes as global peers report a stronger second quarter. General Motors posted a record second-quarter profit, boosted by strong U.S. sales of pickup trucks and SUVs, while Volkswagen said cost-cutting and rising European car sales helped it to beat first-half profit forecasts.

Shares in Hyundai extended gains after the earnings announcement as investors welcomed the higher operating profit, rising 2.6 percent as of 0512 GMT while the broader market was up 0.6 percent. (Reporting by Hyunjoo Jin; Editing by Kenneth Maxwell)

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