SEOUL, April 25 (Reuters) – Hyundai Motor Co (005380.KS) reported a better-than-expected 19% rise in quarterly profit as favorable exchange rates more than offset higher raw material costs and lower sales caused by the prolonged global shortage of chips.

The company’s global car sales fell nearly 10% in the first quarter and Hyundai warned it expects further supply chain disruptions due to shutdowns in several Chinese cities.

Like other automakers, Hyundai has raised prices to cope with soaring raw material spending and logistics costs such as chip sourcing, and analysts expect further vehicle price increases.

Net profit soared to 1.6 trillion won ($1.3 billion) in January-March. Analysts had expected a profit of 1.4 trillion won, according to Refinitiv SmartEstimate.

Shares of the automaker jumped as much as 4% but pared gains to end 1% higher.

“Robust sales of luxury SUV and Genesis models, declining incentives and a favorable currency environment contributed to higher revenues…despite the slowdown in sales volume,” Hyundai said in a statement.

The South Korean won depreciated nearly 7% against the US dollar over the period, boosting the value of overseas earnings.

Hyundai, which suspended operations at its St. Petersburg plant on March 1 and only sells remaining inventory in the country, said it was seeking to minimize costs by cutting incentive and marketing expenses.

“We will consider delaying planned investment executions this year and new car launches in Russia to improve the profitability of our operations in Russia,” Executive Vice President Seo Gang Hyun said on a conference call.

Hyundai and its subsidiary Kia Corp (000270.KS) together have the second-largest share of the Russian market after French automaker Renault (RENA.PA), and Hyundai’s Russian sales account for about 5% of its overall sales.

Hyundai has not decided when to resume operations. Currently, no major automaker has announced a complete withdrawal from the Russian market. Read more

($1 = 1,249.1500 won)

Reporting by Heekyong Yang and Joyce Lee; Editing by Sayantani Ghosh and Edwina Gibbs

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