By Heekyong Yang

SEOUL (Reuters) – Hyundai Motor Co is likely to report a 4% bump in first-quarter profit thanks to a sharply weaker won boosting the value of its exports and offsetting a prolonged chip shortage, a sales slump in Russia and rising raw material costs.

For the quarter ended March 31, the South Korean automaker is expected to report a net profit of 1.37 trillion won ($1.11 billion), according to a Refinitiv SmartEstimate drawn from 14 analysts, up from 1.32 trillion won a year earlier.

But analysts said the ongoing global chip shortage remains a major problem for Hyundai, which when grouped with affiliate Kia Corp is among the world’s top 10 automakers by sales.

Hyundai’s production could be further squeezed by shortages of other parts, those that it buys from China, where many factories have shut due to COVID-19 lockdowns, they said.

“A weak won was a key booster for Hyundai,” said Kim Jin-woo, an analyst at Korea Investment Securities.

“The speed of won depreciation has been drastic enough to offset all the problems, including chip shortages, a spike in raw material prices and poor sales in Russia after Moscow’s invasion of Ukraine.”

The South Korean won was nearly 7% weaker against the U.S. dollar in January-March than a year earlier, touching a near two-year low.

Sales of cars produced at Hyundai’s factory in Russia – meant for domestic consumption as well as exports – slumped nearly a third in the first quarter, Hyundai sales data showed.

Hyundai, which with Kia has the second-largest share of the Russian car market – after French automaker Renault – suspended operations at its St. Petersburg assembly plant on March 1, citing problems with deliveries of components. It has not decided when to resume operations.

“It would be inevitable for Hyundai to take a hit from the Russia-Ukraine conflict, because it would continue to cost them to just maintain Russia operations, while not being able to sell as many cars,” Kim said.

Hyundai is scheduled to announce results on Monday.

($1 = 1,235.6000 won)

(Reporting by Heekyong Yang; Additional reporting by Jihoon Lee; Editing by Sayantani Ghosh and Bradley Perrett)