SEOUL — Hyundai Motor reported a better-than-expected 19% rise in quarterly profit, as favorable foreign exchange rates compensated for higher raw material costs and lower sales due to a chronic global shortage of chips.

The company’s global car sales fell nearly 10% in the first quarter, and Hyundai warned that further supply chain disruptions were expected due to the lockdown in several Chinese cities.

Like other automakers, Hyundai has raised prices to deal with soaring raw material bills and logistics costs such as procuring chips, and analysts expect car prices to rise further.

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

Shares of the automaker rose 4% despite closing up 1%.

“Strong sales of SUVs and Genesis luxury models, reduced incentives, and a favorable foreign exchange environment helped boost revenue … despite slowing sales,” Hyundai said in a statement.

The South Korean won has weakened nearly 7% against the dollar during that period, boosting the value of overseas earnings.

Hyundai suspended operations at its St. Petersburg plant on March 1 and sold only remaining stock in the country, where the company said it wanted to minimize costs there by cutting incentives and marketing expenses.

“We will consider delaying the execution of planned investments this year and the launch of new vehicles in Russia to improve the profitability of our Russian operations,” executive vice president Seo Gang Hyun said on an earnings call.

Hyundai and its subsidiary Kia’s combined share of the Russian market is second only to French automaker Renault, where Hyundai’s sales account for about 5 percent of its total sales.

Hyundai has not decided when it will resume operations. So far, no major automaker has announced a complete withdrawal from the Russian market.

(1 USD = 1,249.1500 KRW)

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

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