Hyundai Motor reported a 15-point-eight percent drop in second-quarter operating profit, hit by the impact of new 25 percent U.S. auto tariffs imposed in April.

South Korea’s leading automaker announced on Thursday that operating profit fell to three-point-six trillion won, about two-point-six billion U.S. dollars, even as revenue rose seven-point-three percent year-on-year to a record 48-point-three trillion won, boosted by strong hybrid vehicle sales.

Net profit for the quarter came in at three-point-25 trillion won.

Hyundai said profitability was squeezed by higher global sales incentives, increased costs, and the full impact of tariffs in its largest export market.

The company warned of ongoing risks in the second half of the year due to tariff uncertainties and weakening demand in emerging markets.